The Reliance Worldwide Corporation Ltd (ASX: RWC) share price will be on watch on when trading opens trading this morning, following the release of its results for the half year ended 31 December 2019.
Reliance Worldwide is the world’s largest manufacturer of push to connect (PTC) plumbing fittings and water control valves.
Solid overall sales growth
Reliance Worldwide achieved 5% growth over the prior corresponding period in net sales, to reach $569 million during the first half of FY20. However, the company notes that this growth rate was significantly impacted by currency translation effects. Reliance’s net sales came in at 0.4% on a constant currency basis.
The group’s Americas segment reported particularly strong sales growth of 7%, while underlying like-for-like growth was 4.2%.
UK’s core plumbing and heating divisional sales increased by 3%, amid volatile trading conditions due to Brexit and election uncertainties. Asia Pacific sales, however, came in as flat, despite a 22% drop in Australian housing commencements.
The group reported a significant 163% increase in cashflow on the prior corresponding period, with net cash from operating activities coming in at $112.8 million.
Net profit after tax (NPAT) came in at $50.1 million for first half, while adjusted NPAT came in a $63.7 million, compared to $80.5 million in the prior corresponding period.
Commenting on the numbers, Reliance Worldwide’s managing director Heath Sharp said: “Operationally this was a strong half, however, the result reflects weaker conditions in two of our key markets, EMEA and Asia Pacific, while our performance in the Americas was partly explained by the timing of some of our marketing and promotional activities.”
Impact of coronavirus
Reliance Worldwide confirmed that it has a strategy in place to continue to evaluate the impact that the coronavirus will have on its supply chain and customers. Its preliminary assessment indicates there should be minimal impact in the short term. The company said that it is working actively with its supply partners to prioritise production to restock products that have lower inventory levels.
Outlook and dividend
Reliance Worldwide has amended its earnings guidance for FY20 and now expects adjusted NPAT to be in the range of $140 million to $150 million. This compares with its prior NPAT guidance range of $150 million to $165 million.
The group’s key assumptions for the second half include stronger sales performance in the Americas, partly driven by marketing and promotional activity. It also expects to see stronger sales in EMEA, consistent with the segment’s typical seasonal trading patterns.
The company declared a 13% increase in its interim dividend to 4.5 cents per share.
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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide Limited. 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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