Reece (ASX:REH) share price on watch after 25% increase in FY 2021 profits

The Reece Ltd (ASX: REH) share price will be on watch on Wednesday. This follows the release of the plumbing…

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The Reece Ltd (ASX: REH) share price will be on watch on Wednesday.

This follows the release of the plumbing parts company’s full year results after the market close today.

Reece share price on watch after reporting strong profit growth

  • Sales revenue up 4% to $6,271 million
  • Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) up 11% to $720 million
  • Net profit after tax up 25% to $286 million
  • Earnings per share lifted 10% to 44 cents
  • Fully franked final dividend doubled to 12 cents per share, bringing full year dividend to 18 cents per share (up 50% year on year)

What happened for Reece in FY 2021?

For the 12 months ended 30 June, Reece reported a 4% in sales revenue to $6,271 million.

This was driven by a 9% increase in ANZ revenue to $3,154 million and an 11% constant currency increase in US revenue to US$2,333 million. The latter was flat year on year in Australian dollars at $3,117 million due to the impact of foreign exchange.

Reece’s earnings grew at a quicker rate on a normalised basis thanks to margin expansion and operational discipline. Normalised EBITDA grew 11% to $720 million over the 12 months.

This comprises a 17% increase in normalised ANZ EBITDA to $496 million and a 10% lift in normalised US EBITDA to US$167 million.

What did management say?

Reece’s CEO and Managing Director, Peter Wilson, was pleased with the way the company overcame numerous challenges during FY 2021.

He said: “FY21 presented many challenges. The evolving environment due to the pandemic, the Texas freeze and the Australian bushfires tested us. But it’s also shown how resilient our business is.”

“This year, we cemented our 2030 vision – to be the trade’s most valuable partner, helping them succeed in a digital world. We’ll do this by being brilliant at the fundamentals of our operations, being both strategic and opportunistic to grow the business and fostering a culture of innovation. This approach, coupled with construction activity being at an all-time high, and our customers being busier than ever, has led to record results for the Group.”

What’s next for Reece?

No guidance or trading update for early in FY 2022 has been provided. This could potentially weigh on the Reece share price on Wednesday.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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