It’s a tale of two markets for Metro Glass as Australian performance sags
Commercial glass installer Metro Glass (ASX: MPP) is optimistic about its New Zealand business. Australian arm, not so much.
The company flagged an earnings downgrade ahead of its March 31 year-end this morning, after a “very disappointing year” for its Australian business.
Group earnings before interest and tax are now forecast to come in at $25 million, down from $28 million.
The addition, the company flagged an impairment write-down of $7-10m on its Australian-based assets.
Shares in MPP were unchanged at 55 cents in morning trade, down from a 12-month high of 89 cents reached last July.
Metro Glass partly attributed its poor performance in Australia to a lack of execution which had left some customers dissatisfied.
The company said it made improvements in the second half of last year, after it was forced to carry out job reworks in the wake of some poor service delivery.
It’s now focused on “winning back the trust and confidence of our customers, who were impacted by variable service levels in 2018”.
The results stood in contrast to New Zealand, where the company highlighted continued improvements in customer service and profit guidance in line with expectations.
Metro Glass is dual listed on the ASX and the NZ stock exchange, and its business across the Tasman forms the core of its earnings base.
For the 2018 financial year, revenue from the New Zealand business totalled $212 million while the Australian operations contributed $55m.
The company also cited the subdued outlook for residential construction amid the ongoing downturn in Australia’s housing market. Specifically, the steep fall in building approvals across the major east markets in Sydney and Melbourne.
However, the company said the bulk of its revenue from that sector is derived from renovations to existing detached dwellings, which leaves it less exposed if apartment developers pull the pin on new projects.
Despite that, activity levels in Australia “are anticipated to soften” in the 2020 financial year.
MetroGlass will release its full-year results for the 2019 financial year on May 23.