Shares of appliance and auto parts marker GUD Holdings Limited (ASX: GUD) fell 11% this morning after the release of its latest half-year results.
In an announcement to the ASX, GUD Holdings reported a 63% fall in profit before tax, from $24.35 million to $8.79 million, for the six-month period ended 31 December 2015.
The company said an impairment of $18.5 million mostly attributable to the group's Dexion business, which develops stacking systems for warehouses, was the cause for the poor result. While the company reported revenue growth of 20%, it's important to note that a significant amount of this can be attributed to recent acquisitions. The company's debt level remained in line with its expectations, and the dividend was maintained at 20 cents per share fully franked.
"The pleasing aspect of this set of results is the contribution from the BWI acquisition, which has added to the continuing growth that is evident in our Automotive business," Managing Director John Ling, said. "The integration of BWI into GUD is progressing to plan and its financial performance was a little better than our expectations at the time of the acquisition."
"Both Davey and Oates reported profit growth on last year, however the financial performances of Sunbeam and Dexion have provided us with challenges," Mr Ling added. "Whilst sales in Sunbeam improved in the half, and market share was maintained, the decision to defer price increases, to offset the effect of the lower currency on product costs, constrained profit performance."
The company says it has put in place "actions" to address the issues of Sunbeam and Dexion. Sunbeam, the appliance maker, will increase prices by 8% in February, reduce its marketing spend and benefit from a restructure. Dexion will relocate its warehousing and office functions, and the costs associated with this will be offset by overhead cost reductions and procurement cost savings, according to the company.
"We are expecting to deliver improved performance in the second half compared with the first half across all businesses," Mr Ling commented. "This, combined with both the Sunbeam ANZ joint venture and Dexion performing at similar levels to the second half last year, should result in underlying EBIT for the full year being in the range of $82 million to $88 million."
