Restructuring GUD Narrows Losses

A second successive annual loss GUD Holdings after the sale of two businesses in the 2016-17 June year slashed $58.9 million from the company’s bottom line.

The Melbourne-based manufacturer of household and industrial goods reported an annual net loss of $7.3 million, compared with a loss of $43 million in the 2015-16 financial year.

On an underlying basis, earnings rose 11% to $51.1 million, thanks to the restructuring. Revenue was up 4% to $426.3 million, stripping out the discontinued businesses.

The loss at GUD’s bottom line came from discontinued operations, with the sale of storage and logistics business Dexion and lock manufacturer Lock Focus which contributed most of the $58.9 million of red ink.

Final dividend was lifted to 25 cents per share from 23 cents a year earlier, confirming that the loss a second year was not that concerning for the board.

Total payout for the year was 46 cents, up around 7% from the 43 cents paid in 2015-16

The shares fell 2.2% to end yesterday’s session at $11.91, but remain up 15% so far in 2017.

“The strong operational result continues to be underpinned by organic growth in our Automotive businesses, which has been supplemented by the two acquisitions in this sector,” GUD’s Managing Director, Jonathan Ling, commented.

“It was also satisfying to successfully divest the underperforming Dexion and the small Lock Focus businesses during the year,” he said.

The company said its automotive interests remain the key source of revenue and earnings, and work remains to be done with Davey and Oates.

The company’s automotive parts business includes the Ryco and Wesfil filter brands and Narva accessories, while it also owns the Davey pumps and pool products business and Oates.

Earnings in the automotive business rose 11% 11 to $74 million, contributing almost 90 per cent of GUD’s total earnings. Earnings in the Oates business fell 15% due lower sales caused by the collapse of the Masters hardware brand and the withdrawal of Oates products from Woolworths supermarkets.

Davey’s earnings dropped 24% as demand was impacted by poor weather conditions.

Looking to 2017-18 Mr Ling said: "we are anticipating further improvements in both underlying and reported financial performance in all our businesses.”These will come about as a result of a variety of initiatives and programs in every business.”

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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