At the time of writing, shares in the plumbing manufacturer are trading for $6.17 – up 3.87%. Earlier, shares hit the benchmark high of $6.18. The S&P/ASX 200 Index (ASX: XJO) is 0.39% higher.
Let’s take a closer look at today’s announcement.
Reliance Worldwide share price rockets on 86% increase in dividend
- Net sales of $1.3 billion, which is up 15% on the prior corresponding period (pcp).
- Reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $341 million. That’s a 56% leap on the pcp.
- Reported NPAT of $188 million – up 111% on the pcp.
- Basic earnings per share (EPS) of 24 cents – also up 111% on the pcp.
- Full year dividend of 13 cents per share (6 cent interim + 7 cent final payment), 20% franked. It’s a rise of 86% on the pcp and, on the current share price, is a yield of 2.19%.
What happened in FY21 for Reliance Worldwide
In August 2020, the Reliance Worldwide share price was impacted when the Victorian government introduced stage 4 restrictions as part of its ultimately successful attempt to halt the spread of coronavirus during its second wave.
Reliance Worldwide operates 4 factories in Melbourne that ship across Australia and the wider Asia-Pacific region. After some uncertainty, Reliance assured investors it could operate as an essential business, but under restrictions.
The booming housing market also may have had affected Reliance Worldwide shares. As Motley Fool previously reported, the flourishing property and construction markets were occurring at a time of low interest rates and government subsidies. ASX construction shares, like Reliance, saw a noticeable uptick at the time.
What did management say?
Reliance Worldwide CEO Heath Sharp said the 2021 financial year had been a record one for the Company:
Over the course of FY2021 we sold more products to more customers than ever before. Each of our regions recorded strong sales growth, and this translated into strong earnings growth. The trend behind this growth was common to all our key markets, and it was the increased spending by property owners on their homes. It was supported by strong new homebuilding activity particularly in Australia where our business has its highest exposure to new residential construction.
Cost inflation pressures were markedly higher in the second half of the year, with input costs such as copper, steel and resins all trending higher, and cost increases also experienced in freight and packaging. These higher costs were able to be mitigated by price increases.
What’s next for Reliance Worldwide?
In its statement, Reliance Worldwide says it will not provide an earnings guidance for FY22 “due to the considerable uncertainty surrounding market demand and the potential impacts of further COVID outbreak”.
The company says it will update investors each quarter on trading conditions in its three regions, including sales and operating earnings.
Finally, Reliance has signed a new contract with its CEO, which it has also announced today.
The company says Sharp’s total remuneration will be adjusted to align with appropriate market benchmarks.
“This will be achieved by implementing a downward adjustment of fixed remuneration by approximately 20% over a transition period of 3 years with a corresponding increase in Short Term Incentive (“STI”) and Long-Term Incentive (“LTI”) opportunities,” according to the company.
Reliance share price snapshot
Over the past 12 months, the Reliance Worldwide share price has increased 115%. It has outperformed the S&P/ASX 200 Index (ASX: XJO) by about 90 percentage points in that time. Year-to-date, Reliance shares have gained 52%, outpacing the ASX 200’s 12%.
Reliance Worldwide has a market capitalisation of around $4.8 billion.