Reliance Worldwide operations to continue in Victoria

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price could receive a boost after the company provided the market with …

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The Reliance Worldwide Corporation Ltd (ASX: RWC) share price could receive a boost after the company provided the market with an update on its Victoria operations.

Green light for Reliance manufacturing facilities

Earlier today Reliance updated shareholders on its Melbourne operations in light of Victoria's second coronavirus lockdown. The company assured shareholders that its Melbourne operations were classified as a 'permitted industry' and would continue to operate, based on the guidelines provided by the Victorian Government. 

With the government introducing Stage 4 restrictions in Victoria on business activities, Reliance was forced to assess the impact of the new constraints on its manufacturing and distribution facilities in the state.

The company has 4 plants in Melbourne which supply products for the domestic Australian market and Asia Pacific region. In addition, some complementary products are also manufactured in Melbourne and exported to the company's North American operations.

In an update yesterday, Reliance assured investors that the company maintained sufficient inventory levels to mitigate any supply disruptions. The company also noted that the new restrictions in Victoria would not have any short-term impact on sales in North America.

How has Reliance performed during the pandemic?

Reliance is a plumbing supplies company and the world's largest manufacturer of push-to-connect (PTC) plumbing fittings. The company's flagship product 'SharkBite' has been embraced by plumbers who prefer the PTC technology over soldering traditional brass fittings.

In the company's most recent trading update released in early May, Reliance noted that manufacturing operations in Australia had been scaled back. The company said that new housing construction in Australia was expected to decline over the next year, resulting in reduced manufacturing operations.

Reliance also noted that 40% of its workforce in the UK had been placed on leave, as demand in the region was down 35% to 40% on  pre-COVID-19 levels due to restricted services. However, the company also highlighted that operations in North America remained unaffected, with sales in the US continuing to track in line with expectations.

Foolish Takeaway

The Reliance share price has bounced more than 60% from its lows in late March of $1.63. At the time of writing, the company's share price is trading slightly higher at around $2.68 following the recent update.

Nikhil Gangaram 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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