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DuluxGroup posts 4% decline in half year profit

The DuluxGroup Limited (ASX: DLX) share price has edged higher this morning after the release of the paint products company’s half year results.

At the time of writing the Dulux share price is up slightly to $9.75, just short of its takeover offer of $9.80 cash per share.

What happened in the first half?

This morning DuluxGroup announced a first half result which was in line with the guidance given at the end of the last financial year. This was achieved thanks to a strong second quarter performance which offset a challenging first quarter.

In the first half DuluxGroup posted sales revenue of $892.9 million. On a like for like basis, excluding the divested and exited paints businesses in China, sales revenue grew 0.2% over the prior corresponding period.

On the bottom line the company recorded a first half net profit after tax of $68.2 million. This was a decline of 4.1% or $2.9 million on the prior corresponding period, but in line with expectations. It is also worth noting that the prior corresponding period excluded a number of one-off items that favourably impacted its result.

DuluxGroup’s managing director, Patrick Houlihan, was pleased with the company’s performance at the end of the half and appears optimistic that the positive momentum will carry over into the second half.

“Overall, sales revenue and EBIT were flat for the half excluding last year’s favourable one-offs. The first quarter was particularly challenging, as predicted, offset by a stronger second quarter, in which revenue growth returned to a more normal 4% level.”

He added: “Our stronger second quarter trading, which has continued into April, gives us confidence about our second half and full year.”

The DuluxGroup board has declared a fully franked interim dividend of 15 cents per share, which is an increase of 7.1% on the prior period. It also declared a fully franked special dividend of 28 cents per share.

Management also provided an update on its takeover by Nippon Paint. According to the release, a scheme booklet, including the Independent Experts Report, is on track to be delivered to shareholders in late June.

After which, a scheme meeting is scheduled to take place in late July or early August. This is the meeting where shareholders will be able to vote on the scheme which has been recommended by the DuluxGroup board.

Elsewhere in the building products industry today, the Adelaide Brighton Ltd (ASX: ABC) share price is up 2.5% and the James Hardie Industries plc (ASX: JHX) share price has risen 1%.

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Motley Fool contributor James Mickleboro 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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