New revenue streams are flowing at Reece Limited as the plumbing supplier's US and New Zealand acquisitions lift sales to the top end of guidance.
But the company's share price was subdued on Thursday following softer Australian housing market data, while new costs kept a lid on net profit.
Australia's largest bathroom supplies business doubled its revenue for the six months to December 31 to $2.72 billion while integrating its $1.91 billion MORSCO purchase in the US, and bedding down Edward Gibbons and Zip Plumbing assets in NZ.
The company said $30 million in acquisition costs and a softening property market in Australia weighed net profit down 7.6 per cent to $97.7 million for the half.
Minus the new purchases, net profit rose 20 per cent to $127 million.
Reece's total branch network in Australia and New Zealand was 635 outlets for the half, an increase of 20 outlets, while the US network added two outlets to make it 173.
It said MORSCO was performing in line with expectations but a property slump in Australia had proved a headwind.
"We are seeing more moderate growth in the residential building market in Australia, while non-residential commencements remain strong," Managing director Peter Wilson said.
"Business momentum in the US continues, with construction and investment in infrastructure returning to long-term averages."
Reece's first half results followed news Australian home loans rose at their slowest monthly pace in more than four years in January, with the annual rate the weakest on record, as credit tightening by banks and a sharp fall in housing prices turn off demand.
Shares in Reece were trading 2.17 per cent lower at $10.37 at 1510 AEDT, down 18.3 per cent from an historic peak of $12.70 in September.
The company will pay a fully franked interim dividend of 6.0 cents per share, unchanged from a year ago.
NEW AQUISITIONS BOOST REECE HY REVENUE
* Net Profit down 7.6pct to $97.7m
* Net profit minus acquisitions up 20pct to $127m
* Revenue up 104pct to $2.72bn
* Fully franked interim dividend of 6.0 cents per share, unchanged
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