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Plumbing supplies company Reliance Worldwide (ASX: RWC) is bouncing back after a slow FY20, with US sales up 22 per cent in July.
The company's optimism for the future follows a soft financial year, during which RWC reported net profit after tax of $89.4 million, down 33 per cent.
RWC's results were largely impacted by COVID-19, with just 5 per cent growth in reported net sales during the year after the company's UK and European sales dived.
However, the company performed well in the US, with 11 per cent second half sales growth, and 6 per cent growth for the year overall.
Despite a slowdown in Australian new residential construction during the initial COVID-19 market disruption, the company's Asia Pacific sales were up 2 per cent.
"Our performance this year has been impacted by what occurred in the second half with COVID-19, with sales trends varying by region reflecting the differing market responses to the pandemic," says RWC CEO Heath Sharp.
"In contrast to the US, sales in EMEA (Europe, the Middle East and Africa) were down 20 per cent in the second half as UK and Continental Europe curtailed business activity in response to COVID-19.
"We significantly reduced manufacturing and distribution activity in the UK and Europe for a period, including placing over 400 employees on furlough."
The impacts of COVID-19 appear to be wearing off for RWC, with sales in the US 22 per cent higher in July than for the same month last year.
As a result, shareholders have responded positively, sending the company's shares up by 21.6 per cent at 10:15am AEST.
In APAC, external sales in July are slightly ahead year on year, and EMEA sales in July were 96 per cent of the same month in 2019.
RWC also generated $217.9 million in earnings in FY20, impacted by restructuring and impairment charges of $33.4 million.
The plumbing supplies group today declared total dividends for FY20 of 7 cent per share, despite RWC receiving wage subsidies of $4.1 million across EMEA, $300,000 in New Zealand and $200,000 in Canada.
Due to ongoing uncertainty surrounding market demand and potential impacts of further COVID-19 outbreaks RWC will not provide earnings guidance for FY21.
Updated at 11:51am AEST on 24 August 2020.
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