Metro Performance Glass today provides an update on trading and provides guidance on its anticipated results for the FY24 year which are due to be released in May 2024.
CEO Simon Mander said “Activity in the residential sector softened through the second half of 2023, impacting demand for glass. The beginning of the calendar year was particularly weak as the sector restarted slower than expected after the Christmas holiday period. Reduced supply chain costs were supportive. Uptake of high value LowE glass continues to increase, reaching circa 50% of the double-glazing sales mix for the financial year to date, and this quarter increased to 60%. In late February 2024 we ceased processing glass at our Wellington factory and closed a regional branch in Auckland. During the year we reduced headcount in New Zealand by 10%.”
Australian Glass Group (AGG) continues to deliver satisfactory financial and operational performance at a time of residential sector softness partially offset by the penetration of double glazing in new residential buildings. The capital programme is on track which will expand capacity and improve plant reliability.
AGG sale process
As we have previously communicated, the board has been pursuing the divestment of AGG to reduce debt. The sale process continues to advance but has extended longer than anticipated. The company expects to provide a further update prior to the annual results in May 2024.
Q4 Market Outlook
Economic forecasts suggest a restrained 2024 with stubbornly high inflation and interest rates placing downward pressure on the sector, offset by underlying housing demand from immigration.
Metroglass expects demand for glass to be flat for at least the next 12 months in New Zealand. The business has resized to meet expected demand whilst ensuring customer service and quality is not compromised.
In Australia, demand for AGG’s products and services remains solid supported by national construction code changes increasing double-glazing usage in residential buildings. AGG’s niche positioning providing some protection from wider sector softening.
Financial Update
Consistent with our November release, market volatility has continued. Whilst we typically experience a loss in January, the result was significantly worse than we had anticipated primarily driven by lower sales in New Zealand. In Australia, trading was also subdued most notably in Tasmania. February trading improved but did not catch-up January trading and was ultimately behind what we previously anticipated at our half year release, for both NZ and AGG, albeit to a greater degree in NZ.
For the financial year ending 31 March 2024 Metroglass expects to achieve Group EBIT before significant items in the range of $7.0 million to $8.0 million vs. $11.8 million in FY23. Net debt is expected to be circa $55 million vs. $60.1 million in FY23.
Due to the combined trading performing in January and February 2024, Metroglass revises previously provided management forecasts for AGG. AGG is expected to achieved revenue, EBITDA and EBIT of approximately AUD $74.0 million, AUD $11.0 million, AUD $6.0 million (Excluding Group management fee of NZD 0.5 million) respectively.
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