DuluxGroup Limited (ASX:DLX) has reported a strong operating result for 2011, with earnings increasing despite supply constraints due to the Queensland floods, and softness in New Zealand, Powder Coating and China markets.

The company’s brands include household names like Dulux, Selleys, Yates, Cabots, British Paints, Polyfilla, and Walpamur.

Demerged in 2010 from Orica Limited (ASX: ORI), the shares have been a solid performer, gaining 5 per cent during a time the S&P/ASX 200 index has fallen 3 per cent.

Dulux’s results, with underlying profit rising 9 per cent, came as they enhanced their Australian market leadership position, with strong momentum across all major categories and both retail and trade channels.

Growth is Dulux’s biggest challenge. They have broad distribution into retail and trade channels, consistent profit margins and strong cash generation, and a culture of delivery. But in only a modestly growing market, Dulux shareholders probably shouldn’t expect too many fireworks in the coming year.

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