A week ago, GWA, the Brisbane-based bathroom and kitchen products group, announced managing director Peter Crowley would step down from the company.
Yesterday it revealed it had downgraded its earnings guidance for the financial year ending today, June 30.
The company told the ASX that it now it expects trading earnings before interest and tax for 2014-15, before significant items, will be between $67 million to $69 million.
That compares to the forecast with the interim result in February of a trading EBIT ‘around $70 million’ for the 2014-15 year.
The problem, it seems is the weak performance of the Gliderol garage doors business that cost GWA $42 million in 2010 and is now about to be sold.
GWA said yesterday that it expects to book a $25 million write-down against the Gliderol business, which it expects to sell for $7 million to Reliance Doors on July 31.
GWA has been shedding assets to simplify its business. It announced it would sell Gliderol last April after sales of its Dux Hot Water and Brivis air conditioning operations.
The sales follow closure of several Australian manufacturing operations last year as the company moves increasingly to an import only model.
Mr Crowley, who has been at the company more than 12 years, will depart on June 30 next year. He will be replaced by Diageo Australia & New Zealand boss Tim Salt.
To keep shareholders interested, GWA said yesterday the board will consider “future capital management initiatives” in 2015-16, suggesting the company is keen to reward shareholders after disappointing performances in the past few years.
GWA said its financial position was solid, the group had low debt, and the remaining business were generating strong cashflow.
Mr Crowley said GWA expected to be able to resume paying both an interim and final dividend in 2015-16, and the board would consider further capital management initiatives.
GWA has not paid an interim dividend in the past two financial years.
That hint wasn’t enough to support the shares in yesterday’s big Greece-driven sell off.
The shares fell 5.1% yesterday to $2.23, a two-year low. The company reports full-year earnings on August 18.
GWA 1Y – GWA downgrades earnings
And did we see a quasi downgrade yesterday from protective products group, Ansell (ANN)?
Ansell said in a statement it was launching a major cost-cutting program aimed at saving it $15 million a year.
The cuts include the closure of a small number of under-utilised offices and warehouses, and the transfer of some back office finance and supply chain staff to shared service centres.
The company expects the changes will result in a one-off cost of about $17 million for its fiscal 2015 accounts and lead to annual savings of $15 million in fiscal 2017.
Ansell said it needed to make the changes to help offset adverse currency movements and the effects of economic uncertainty in some of its markets.
That seems to be a hint that the company is seeing strains in some parts of its global business from the rise in the value of the US dollar and the uncertainty in parts of Europe and Asia.
The shares eased 2% to $23.76.
