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GWA share price jumps on 7% bottom line growth

Caroma Heritage bathroom

The GWA Group Ltd (ASX: GWA) share price is up 5.47% after it announced a solid set of results for the first half of the 2019 fiscal year, showing continued top line growth while maintaining profitability. The company declared a fully franked interim dividend of 9 cents per share, up 6% on the previous corresponding period.

GWA manufactures and distributes building fixtures and fittings to households and commercial premises.

A brief summary of the group results is provided below:

  • 2.6% revenue growth pcp
  • A 7.3% increase in underlying net profit after tax, driven by higher EBIT and lower interest expense due to lower debt
  • EBIT margin maintained at 24.9%.
  • Operating cashflow up 31.6% driven by more efficient working capital management, helped by a new distribution centre in NSW

Revenue growth in spite of somewhat challenging market conditions saw the group gain market share over the period. A decline in residential construction activity dragged on GWA’s detached house completions and medium to high-density dwelling completions, which together make up a third of group revenues.

GWA foresees similar market conditions in the second half of FY19, with second-half group EBIT expected to be in line with the first half.

The group also stated that its proposed acquisition of shower and tapware manufacturer Methven Limited (NZE: MVN) is expected to complete by mid-April, subject to regulatory and shareholder approvals.

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Returns as of 6th October 2020

Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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