Consumer and industrial products supplier GUD Holdings says trading conditions are expected to remain tough in the second half of the financial year in the wake of a fall in profits in the first half.
GUD’s brands include Sunbeam household electrical goods, Davey water pumps, Wesfil automotive filters, Oates cleaning products, and Dexion storage products.
The company on Tuesday booked a net profit of $23.04 million for the first half of the 2011/12 financial year, down 1.3 per cent on the prior corresponding period.
The company said trading conditions across most businesses had been soft in the first half.
“Trading conditions for (GUD’s) consumer and water (businesses) are expected to remain difficult through the second half, and we continue to invest in new product activity to assist in offsetting these competitive conditions,” GUD managing director Ian Campbell said in a statement.
“Our balance sheet position remains sound, and we retain a strong focus on both product and overhead cost controls in all businesses.
“At this point, we anticipate producing a full-year underlying EBIT (earnings before interest and tax) slightly ahead of FY11 (2010/11 financial year), with a stronger second-half contribution from Dexion and a continued solid performance from (the) automotive (business).”
Mr Campbell said GUD’s biggest division, the consumer business, was affected by tough conditions in the retail sector in the first half, and prices had been cut to maintain competitiveness and volumes.
Prices were cut on Sunbeam small appliances, and Oates cleaning products lost listings as a major retailer shifted to a house brand.
Revenue for the consumer division fell eight per cent to $117.6 million, and underlying earnings declined 15 per cent to $19.3 million.
GUD said further price reductions on Sunbeam products would not be needed in the second half despite tight retail conditions.
The Dexion business had experienced record low levels of activity but had won $60 million worth of new projects in November and December, and more project confirmations were expected in the second half.
GUD’s revenue for the six months ended December 31, 2011, rose 3.7 per cent to $311.1 million, boosted by a full six-month contribution from Dexion, which GUD acquired in September 2010.
GUD declared an interim dividend of 30 cents per share, fully franked, compared to 29 cents one year earlier.
GUD said the interim dividend had been restored to pre-global financial crisis levels.
Shares in GUD were four cents lower at $7.31 on Tuesday.
