GUD announces record profit

GUD Holdings Ltd, which owns the Sunbeam and Emjoi electrical brands, says a stronger Australian dollar and selective price rises helped increase full-year profit 33 per cent to a record $46.4 million.

Underlying net profit increased 24 per cent after allowing for significant items in the prior corresponding period, GUD said.

Revenue rose two per cent to $476.6 million, from $468.3 million in the prior year.

GUD said underlying net profit after tax increased 24 per cent to $46.4 million after allowing for significant items in the prior corresponding period.

This strong result was attributed to a combination of margin expansion, continued tight cost control, a reduction in interest costs and modest sales growth.

Earnings before interest and tax (EBIT) increased 18 per cent over the prior year to $71.6 million, with improvement coming from all business segments, with the standout being a 31 per cent increase in the Davey Water Products business.

The EBIT to sales margin at group level improved to 15 per cent from 13 per cent in the prior year.

Operating cash flow was a record $78.2 million, an improvement of 35 per cent on 2009 financial year level.

Managing director Ian Campbell said there was sales growth across most businesses, despite patchy trading conditions in the second half as consumer confidence in Australia weakened.

"The strong profit result and pleasing cash flow generation reflect the full year impact of the initiatives taken at the outset of the global financial crisis to underpin margins," he said.

"A stronger Australian dollar coupled with these initiatives, which included selective price increases, improved purchasing terms and tight working capital controls, held through the FY10."

He said consumer products business sales fell marginally due to a combination of withdrawal from a number of underperforming personal care categories in small appliances and lower sales of seasonal products due to mild conditions at the start of winter in both Australia and New Zealand.

GUD plans to acquire storage company Dexion Ltd by raising $55 million in new shares.

"On completion of the Dexion acquisition, GUD remains well placed to pursue both organic growth and other complementary acquisitions, should opportunities be identified," Mr Campbell said.

GUD says it expects moderate levels of sales growth in the next financial year across all businesses, despite tough trading conditions in major markets.

"The strength of GUD's brand portfolio should continue to support sales growth in the face of competitive conditions," Mr Campbell said.

"Profit margins in our existing businesses are expected to be maintained, given our focus on tight cost controls, active supplier management and our secured foreign exchange position for FY11.

"However, we remain concerned about cost pressures from offshore suppliers, following recent increases in material and labour costs."

As at the close of business on Friday, GUD held a relevant interest in Dexion of 41.3 per cent.

Earnings per share was a record 76.5 cents, up from 60 cents previously.

GUD has announced a final dividend of 34 cents resulting in a total annual dividend of 62 cents fully franked.

Shares in GUD were up 14 cents, or 1.59 per cent, at $8.93 by 1253 AEST.

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