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Reliance (ASX:RWC) pipes in growth, share price on watch

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is on watch after it told the market that it’s piping in a lot of growth right now.

Will the RWC share price rise?

Total net sales increased by 14% to $359.4 million in the quarter ending 31 March 2021. Reported net sales were hurt by the strength of the Australian dollar. On a constant currency basis, which is if exchange rates hadn’t changed, net sales were up 27%. It continues to see a recovery after the first half result.

Different regions performed to varying degrees. In constant currency, Americas net revenue rose 39%, Asia Pacific net sales rose 11% and Europe, the Middle East and Africa net sales grew 13%.

The company said this reflected strong demand across all regions, reflecting strong demand for plumbing products. There has been particular demand for residential repairs and remodelling. A significant weather freeze event in the US in February accounted for over half of the sales increase in the Americas during the quarter.

Asia Pacific sales were boosted by new residential construction and export sales to the Americas.

RWC then said that sales in April are substantially ahead of the same period last year, with last year’s sales impacted by COVID-19.

Update on costs

The plumbing business said it has seen sustained input cost increases, particularly brass products which have been impacted by higher copper and zinc costs.

RWC is implementing price increases and continues to expect to be able to do so. Pricing discussions with other channel partners are progressing, but are confidential, so the company couldn’t provide any more details.

Heath Sharp, the CEO of RWC, said: “All our major markets are benefiting from increased household spending on repairs and remodeling activity, and Australia is also benefiting from increased new house building activity. The winter freeze event in the southern US in February also boosted sales in the quarter, with freeze-associated purchasing activity flowing right the way through March and into April.

In terms of pricing increases, our largest OEM customers are on indexed pricing and therefore adjustments have already been made. For our wholesale customers, we note that the market overall is moving a second time this year to pass through higher copper cost impacts.”

Summary thoughts

The RWC share price has gone up more than 4% in early trading. It continues to rise after the COVID-19 crash. But I don’t know how long this growth can go on for.

At the moment it’s generating good growth, which is good considering it doesn’t have the same valuation as some other ASX growth shares.

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