Japanese takeover target DuluxGroup will pay a special dividend despite a 14 per cent first-half profit slide, but it forecast a stronger finish to the year on improving home renovation markets.
The paints and homeware manufacturer said on Wednesday that soft market conditions kept sales flat for the six months to March 31, with first-half profit down 13.9 per cent to $68.2 million.
Stripping out favourable one-off items from the prior corresponding period – including the sale of its Glen Waverley paint factory and the exit from China – DuluxGroup’s net profit dipped $2.9 million, or 4.1 per cent.
Revenue fell by 1.5 per cent to $892.8 million for the period.
Managing director Patrick Houlihan predicted the recently improved home renovation market conditions would lift the company’s full-year profit.
“The first quarter was particularly challenging, as predicted, offset by a stronger second quarter, in which revenue growth returned to a (more normal) level,” Mr Houlihan said.
“Our stronger second quarter trading, which has continued into April, gives us confidence about our second half and full year.”
DuluxGroup lifted its interim dividend by one cent to 15 cents per share and announced a special dividend of 28 cents per share, both fully franked.
Mr Houlihan said the company had been considering a special dividend for the past couple of years, once its new $165 million facility in Melbourne was completed.
“Obviously we’ve got overlapping issues here with the takeover offer,” he added.
The Dulux board is recommending shareholders approve the $9.80 per share bid made by Japanese giant Nippon Paint in April.
If the takeover is accepted by shareholders, the deal is expected to be completed in August.
A scheme booklet, including an independent expert’s report, is on track to be delivered to shareholders in late June.
The deal is not expected to change the company’s name in Australia and New Zealand, or its leadership, business portfolio, manufacturing and operations.
Shares in the company were just 0.05 per cent higher at $9.735 at 1035 AEST, having spiked more than 27 per cent last month on the Nippon offer.
DULUX FIRST HALF RESUTS
* Net profit down 13.9pct to $68.2m
* Revenue down 1.5pct to $892.8m
* Interim dividend up one cent to 15 cents per share, fully franked, plus a special dividend of 28 cents per share, fully franked.