The government's tough budget cuts may be about to hit consumers' hip pockets, but paintmaker DuluxGroup doesn't expect them to damage the nation's love affair with home renovations.
The home improvement company has lifted its first half profit by about one third and expects the trend to continue for the rest of the year, despite household budgets coming under pressure from cuts to welfare and family benefits as well as rising petrol prices.
Managing director Patrick Houlihan believes Australians will continue to view their homes as their castles and spend money on renovations.
He said two thirds of Australians either own a home or have a home loan by the time they're 40 and were inclined to spend money on home improvements even during tough economic times.
"We find this psyche that `my home is my castle' still prevails. People are always doing jobs around the home," he told reporters on Monday after announcing the profit result.
"I think back to the global financial crisis and a number of retailers in the home improvement space spoke of the fact their weekday sales went up even in the extreme case where people may have moved from full-time to part-time employment."
Mr Houlihan expects variations in consumer confidence after the budget cuts are finalised.
"But we think the fundamentals of our business model and our market exposures hold us in good stead," he said.
DuluxGroup's net profit rose 88 per cent to $60 million in the six months to March 31, up from $32 million a year earlier.
The result included several one-off items, and when excluded, the company's profit rose 34 per cent to $56 million.
The Melbourne-based home improvement company expects its full year net profit for 2013/14 to rise above the $94.1 million it posted last year.
The first half result was driven by strong sales, cost cuts, improved margins, and a full six month worth of earnings from building products group Alesco.
DuluxGroup rewarded investors with a 25 per cent rise in the interim dividend to 10 cents a share.
Mr Houlihan said the broad economic outlook in Australia and New Zealand, which make up 90 per cent of the company's market, was positive.
"The leading key indicators for both existing housing and new housing segments across Australia and New Zealand are strong," he said.
"In contrast, we expect our markets in China and PNG, which collectively provide about seven per cent of group revenue, to remain softer in the near term."
DuluxGroup shares were 4.5 cents higher at $5.775 at 1454 AEST.
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