NEW GWA (ASX: GWA) boss Tim Salt (pictured) has returned the company to profit in his first full year result with the company, sending the company's share price surging 24.23 per cent today.
The company reported a net profit after tax increase of 15 per cent, to $51.9 million for FY16. The company actually reported a statutory loss last financial year of $16.2 million due to a number of impairments.
The company is trading at a 12-month high of $2.82 per share early this afternoon after the strong result.
The Brisbane-based bathroom fittings supplier has restructured its business, having divested Dux Hot Water, Gliderol Garage Doors and Brivis Australia in FY15 and early FY16, followed by the exit of long-time director Peter Crowley, who stepped down from the company after 12 years.
The divestments were part of the company's plan to move away from manufacturing and this year was the first opportunity to see the new business in action.
Earnings before interest and tax (EBIT) was up 8 per cent to $78.3 million, which the company attributes to improved earnings in its bathrooms and kitchens division and a reduction in corporate costs.
GWA managing director and CEO Tim Salt says he is pleased with the improved result.
"Having divested non-core businesses in FY15 and early FY16, we now have a clear focus on our Bathrooms and Kitchens and Door and Access Systems' businesses where we have strong market positions and capacity to grow," says Salt.
"We made solid progress on our strategic priorities in FY16, in strengthening our product offering to consumers, engaging more effectively with customers and continuing to reduce costs and improve the efficiency of our supply chain network."
The Australian house and apartment building sector is looking promising, a good sign for GWA's prospects in the coming year.
"GWA's products are typically sold at the completions stage of the building cycle and therefore the lag between approvals flowing through to completions and the significant pipeline of work to be completed should support continued activity and demand for our products and brands into FY17," says Salt.
Salt says the launch of Caroma Cleanflush demonstrates the company's ability to leverage its investment in R&D.
"We launched this product in the fourth quarter and initial sales have been strong, creating a positive platform into FY17."
The final dividend of 8c per share is fully franked, bringing the full-year ordinary dividend to 15 cents per share. There will be a special dividend of 1c per share, fully-franked, due to the resolution of the dispute with Carrier Air Conditioning.
The dispute ended with a $2.8 million payment to GWA and the establishment of a confidential process for dealing with any future claims. The claim revolved around the losses incurred in relation to the Brivis business, which was acquired in 2010 and sold to Rinnai Australia in February 2015 for $49 million.
GWA Group is the owner of Caroma, Dorf, Fowler, Stylus, Clark, Austral Lock, Gainsborough and API Locksmiths, and supplier of a number of others.
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