Premium paint and associated products brand, Dulux Group, has reported a net profit after tax of $150.7 million for the year ended 30 September.
It’s an increase of 5.4 per cent on the previous year.
Sales revenue also increased by 3.3 per cent to $1.84 billion.
“EBIT (Earnings before interest and tax) growth of 4.2 per cent was driven by solid growth results across all of our Australian and New Zealand business segments, led by the continued strong performance from our Dulux ANZ business,” said Patrick Houlihan, Dulux ANZ Managing Director.
The Dulux ANZ business contributes 70 per cent of Group business EBIT.
“We believe that the Dulux ANZ result was excellent. Given significant increases in raw material costs and the higher depreciation due to the new Merrifield factory, holding EBIT margin reflected pricing discipline and a strong focus on costs,” said Houlihan.
DuluxGroup encompasses the brands Selleys & Parchem ANZ, B&D Group and Lincoln Sentry.
Collectively they grew EBIT by $3.1 million, an increase of 4.7 per cent.
Revenue growth in Australia was driven by 2.5 per cent market growth, share gains and positive price.
In May Dulux opened a brand new $165 million facility located in Merrifield, north of Melbourne.
The paint company also created 67 new full time jobs onsite.
At 22,000 square-metres, the factory is the largest paint facility in Australia or New Zealand.
Dulux will have produced 50 million litres of water-based paint by the end of the year, for use on commercial construction, road transport and passenger vehicles and home renovations, estimated to be half of the Australian market.
The new housing market accounts for approximately 15 per cent of DuluxGroup revenue.
Completions in the next financial year are expected to remain at levels seen in FY18 despite construction approvals decreasing in the residential sector.
“We see a good runway of growth by continuing our long term track record of market share gains and granular product range extensions in resilient markets biased to maintenance of existing homes,” Houlihan said.
“Lead indicators for DuluxGroup’s key markets in Australia and New Zealand remain generally positive. Our core market, which accounts for approximately two thirds of DuluxGroup revenue, is the maintenance and renovation of existing homes. This market has historically proven to be relatively resilient throughout housing and economic cycles and we expect it to continue providing profitable growth.”
“Recent favourable comments on GDP from the Reserve Bank continued low interest rates and low unemployment support this view.”
Despite significant raw material increases Dulux ANZ is expecting consistent revenue and earnings growth.
2019 net profit after tax is expected to be higher than the 2018 equivalent of $150.7 million.