DuluxGroup Limited (ASX: DLX) has reported its 2018 financial year result revealing profit grew by 5.4% to $150.7 million.
DuluxGroup is the owner of many home improvement brands such as Dulux, British Paints, Selleys, Yates and Cabot’s.
DuluxGroup’s FY18 Result
The paint company reported sales revenue increased by 3.3% to $1.84 billion. If the divested Chinese coatings business was excluded, sales revenue grew by 4.5%.
EBITDA rose by 5% to $257.7 million and net profit grew 5.4% to $150.7 million (click here to learn what EBITDA means).
Managing Director Patrick Houlihan said the result, “…was driven by solid results across all our Australian and New Zealand business segments, led by the continued strong performance for our Dulux ANZ business.”
The other ANZ segments also produced growth collectively. Selleys & Parchem ANZ, B&D Group and Lincoln Sentry collectively grew EBIT by 4.7%.
DuluxGroup had to contend with an increase in raw material costs and higher depreciation due to the opening of the new Merrifield factory. Mr Houlihan commented, “Holding the EBIT margin reflected pricing discipline and a strong focus on costs.”
However, the EBIT in DuluxGroup’s other businesses fell 5.3%. Growth in Yates and PNG was offset by DuluxGroup’s UK business and the Indonesian joint venture.
Dividend
The DuluxGroup Board decided to increase the full year dividend to 28 cents, which is a 5.7% increase on last year’s and represents a 72% payout ratio of profit.
Seeking offshore expansion
DuluxGroup said that it’s looking for more opportunities to expand its product range and capabilities internationally. Whilst the offshore business is still small, management were pleased with the progress in FY18 regarding growth in Asia and the UK.
FY19 Outlook
DuluxGroup said the near future looks generally positive because the maintenance and renovation market, which accounts for two-thirds of DuluxGroup’s revenue, has “proven to be resilient throughout housing and economic cycles” with “low unemployment supporting this view“.
The new housing market business makes up around 15% of DuluxGroup revenue. So, although construction approvals are expected to moderate in FY19, completions are expected to remain at FY18 levels. DuluxGroup expects FY19 profit to be higher than FY18.
The DuluxGroup share price is down 8% over the past six months according to Google Finance.
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