Bathroom and kitchen fittings supplier GWA Group expects residential construction to slow while household spending on renovations to remain strong.
The company behind the Caroma, Fowler and Clark brands says the renovations and replacements market, which accounts for just over half of its revenue, will remain "relatively stable" in the current financial year.
GWA managing director Tim Salt said residential construction activity is expected to slow but a pipeline of building work yet to be completed remains reasonably strong.
He said this will support continued demand for GWA's brands after unveiling a flat group net profit of $53.7 million for the year to June 30, 2017.
As for the current year, he said Victoria and NSW was expected to continue to generate further growth despite softness expected from apartment building, which comprises 11 per cent of GWA's revenue.
"The question is how much of that growth will be offset by what goes on in WA," Mr Salt told an analyst briefing.
He said while construction markets in Western Australia continued to remain weak, the rate of decline in sales has slowed.
A focus on selling dearer products, including a newly launched rimless toilet called Caroma Cleanflush, is expected to boost revenue.
A lift in GWA's bathrooms and kitchens product sales offset a decline in doors and locks sales, which drove the group's revenue marginally higher to $446 million during the 2017 financial year.
Revenue growth was strong across the eastern states, with net sales in NSW up 11 per cent, Victoria up five per cent and Queensland up three per cent.
Mr Salt said the group was starting to "wake up" to the opportunities in aged care and is working with one of its key customers, Bunnings, to better address that market.
The GWA boss also said Harvey Norman was doing a great job at steering customers towards' his company's more pricey fittings.
"Harvey Norman is good at taking consumers as they come into their showrooms and trading them up from a lower value product to a medium to higher value product," he said.
Shares in GWA were flat at $3.16 at 1505 AEST.
BATHS & KITCHEN FITTINGS BOOST GWA SALES:
* Net profit flat at $53.7m
* Revenue up 0.4pct to $446m
* Final dividend unchanged at 9.0 cents a share, fully franked
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