Metroglass says lockdown is hurting more than last year, hitting profit

Tuesday, 21 September 2021

Metroglass says its Auckland plant is the largest in the group and was closed for more than a month in a traditionally busy and profitable part of the year.

Metro Performance Glass, the country’s largest glass manufacturer, warned its first-half profit will fall and it won’t pay dividends to shareholders as it suffers more pain from this lockdown.

Metroglass said pre-tax profit in the six months to September 30 would be $10 million below last year, and its board has decided to postpone the resumption of dividends as a result of New Zealand’s lockdown and ongoing restrictions in Australia.

“The financial impact of this period has been significantly greater than the April 2020 lockdown,” the company said in a statement to the NZX. “In addition to the closure period, the New Zealand business has faced input cost pressure in a more competitive market, and a lower New Zealand Government wage subsidy compared to last year.”

Three of the company’s four New Zealand glass processing plants were closed from August 17 until September 8. The fourth plant based in Auckland is preparing to start operations from Wednesday following Auckland’s move into alert level 3 from midnight on Tuesday, the company said.

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Metroglass noted its Auckland plant is the largest in the group and was closed for more than a month in a traditionally busy and profitable part of the year.

“The New Zealand lockdowns have resulted in considerable disruption, uncertainty, and product shortages across the domestic construction supply chain, which are expected to impact the industry for several months to come as manufacturers, distributors and builders restart and ramp back up,” the company said.

International glass supply and shipping disruptions had increased input costs, and Metroglass has lifted its inventory of safety stock, the company said.

The group’s three processing plants in Australia were operating, and the business was “achieving solid sales”, although that varied across states as Covid-19 shutdowns and restrictions impacted the supply chain, labour availability and absenteeism, and profitability, the company said.

Metroglass expected its debt would be at a similar level to the same period last year, having reduced its borrowings significantly.

At its first half result last year, the company said it had reduced its net bank debt by $25.7m over the year to $47.7m.

Metroglass had done a deal with its banks to ease its banking covenants, which meant it would limit growth in capital expenditure and pay no dividends in the 2021 financial year.

The company had expected to resume dividends in its current 2022 year but has decided to postpone payments.

“While the delay is disappointing, the board remains committed to delivering a conservative and sustainable dividend as soon as possible,” the company said in the statement.

Shares in the company slumped 7 per cent to 40 cents when the NZX opened for trading at 10am. The stock has gained 54 per cent over the past year.

Metroglass will release its first-half results in November.