Building products supplier Alesco Corporation predicts the tough times in the housing market will continue for the near term as it fends off a takeover offer from DuluxGroup.
Alesco on Tuesday reported a net loss of $13.9 million for its 2011/12 fiscal year, compared to a profit of $13.6 million in the prior year.
The result for the 12 months to May 31 was in line with figures provided by Alesco in June.
Alesco, which supplies garage doors, windows and other construction products, said the loss was partly a result of an 11 per cent fall in approvals for detached housing during the financial year, and subdued renovation activity due to weak business and consumer confidence.
New housing and renovation accounts for more than two-thirds of Alesco’s revenue.
Alesco managing director Peter Boyd said the housing market over the current year was likely to be flat.
“The near term is likely to continue to be quite tough,” he said in a market briefing.
Continued wet weather on the east coast of Australia was contributing to volatile market conditions in the first few weeks of Alesco’s current fiscal year.
Alesco said, however, that its low gearing levels, business improvement program and its solid second-half performance in 2011/12 placed it in a good position over the next 12 months to withstand the tough market conditions.
Mr Boyd said two recent interest rate cuts and NSW government incentives to build new houses were encouraging signs for the longer term.
The release of Alesco’s latest results came a day after Dulux launched a sweetened $210 million bid for the company.
But chairman Mark Luby remains defiant, again branding the bid inadequate.
Mr Luby said the fact Dulux had extended the timeframe of its offer three times and sweetened its bid suggested the predator believed Alesco’s prospects were strong.
“The Dulux proposal cannot be delivered without the Alesco board’s support and as such is undeliverable,” he said.
Dulux noted Alesco’s falling revenue and earnings, despite talk of a turnaround and claims of momentum.
“There is nothing in this (result) to make (Alesco) shareholders confident about the future. It’s a case of ‘tomorrow never comes’,” a Dulux spokesman said.
Dulux increased the $2.00-a-share offer it made in May to $2.23, comprising $2.05 in cash plus a payment of up to 18 cents per share in franking credits.
However, for the franking credits to be distributed to Alesco shareholders, the Alesco board would have to declare and pay fully franked dividends of 42 cents per share.
In this instance, Dulux would adjust the cash component of $2.05 to consist of $1.63 cash plus 42 cents in dividends.
Alesco has said paying 42 cents in dividends at this time would not be prudent.
It declared a fully franked final dividend of five cents a share, as well as a special dividend of 10 cents.
Alesco shares were two cents lower at $2.01 at 1536 AEST while Dulux was 2.0 cents weaker at $2.98.
