Tapware maker Methven is focusing on growth and sustainable shareholder returns, despite the ongoing tough conditions.
The company on Tuesday reported a drop of 20% in annual net profit to $5.2 million. Sales fell 7.3% to $98.4 million in the 12 months ended March this year.
chairman Phil Lough told the annual meeting of shareholders that Methven was not happy with the result, but the company had managed to maintain the underlying health of the business which is in sound shape.
He said Methven is targeting soldid sales and growth in net profit for both the first half and for the 12 months ending March, 2014.
Mr Lough said the company is determined to rebuild revenues, which is its principal task.
Supplier's factory in China purchased
Methven is to pay up to $12.5 million, depending on earnings, to buy the factory of its Chinese supplier.
The company will pay an up front cash payment of $4 million for the factory in Heshan in Guangdong province, in June next year and will pay another $4 million in shares.
The current owner, Hui Zhuang, has agreed to stay on until June 2016 to ensure a smooth transition and will be paid up to another $1.25 million dollars in each of those two years, depending on earnings.
The factory was established 12 years ago and exclusively supplies the New Zealand company with Methven products.
Chief executive Rick Fala said Mr Zhuang wants to retire and Methven welcomed the opportunity to capture additional manufacturing margins.
Mr Fala said on Tuesday the purchase will ensure the company's products are internationally competitive.
He told the annual meeting that Methven will maintain its investment in research and development and it plans to launch break-though shower technology in 2014.