Metro Glass 8-month profit beats prospectus forecast, sales miss target

May 27 (BusinessDesk) - Metro Performance Glass, which has more than half of New Zealand's glass processing market, reported profit ahead of its prospectus forecast, while revenue was lower than expected, which it attributed to capacity constraints in the building industry.

Profit was $9.6 million in the 8 months ended March 31, ahead of $9.4 million projected in its July 2014 prospectus, the Auckland-based company said in a statement. Sales came in 2.4 percent below the forecast at $115 million. Metro Performance Glass acquired Metroglass Holdings in May last year before it listed on the NZX in July.

The board declared a maiden dividend of 3.6 cents a share payable on August 4, with a record date of July 20, in line with forecast.

New Zealand building consents are at record highs, driven by a shortage of supply for houses in Auckland and the Christchurch rebuild. Metro Glass said slower sales growth was down to capacity restraints in the building industry, but said the glass maker continued to retain the largest market share.

"Sales have been slightly weaker than expected at the time of the IPO as we believe residential housing consents are now taking longer to convert into sales, reflecting industry capacity constraints," chief executive Nigel Rigby said. "Commercial markets are active and anecdotal evidence suggests commercial sector work is increasing. Nevertheless, the conversion of acceptances of forward orders into revenue is difficult to predict, with many jobs experiencing delays."

Chairman John Goulter said delays in both residential and commercial markets could weigh on Metro Glass's earnings for the next six months, and make achievement of its prospectus revenue target "challenging".

"Reflecting the industry constraints on capacity, we believe the current building cycle will last longer, but have a lower peak," Goulter said. He expected consolidation at its Auckland manufacturing plant and further automation would help keep costs down.

The company had $58 million in liabilities at balance date, slightly ahead of its prospectus forecast. Cash was $7.6 million, down on the $11.4 million in the prospectus.

Metro Glass also said departing chief financial officer David Carr will be replaced by John Fraser-Mackenzie, previously a finance director at Goodman Fielder (NZ).

Metro Glass shares fell 2.2 percent to $1.80, still above the $1.70 offer price in July last year, when it raised $244.2 million.

Of the money raised, some $230.5 million was used to buy the Metroglass assets from private equity owners Crescent Capital and Anchorage Capital and senior management, with the private equity owners keeping a combined stake of 18.5 percent and management retaining 3.8 percent. Some $10.9 million covered the cost of the offer and $2.8 million went towards reducing debt.