COVID-19 has lifted consumer awareness of hygienic practices.
The post GWA (ASX:GWA) boosts dividend – share price rockets 11% appeared first on The Motley Fool Australia. –
The GWA Group Ltd (ASX: GWA) share price is rocketing up 11% in early afternoon trade.
This follows on the release of the water solutions products and systems’ company’s full year financial results, for the year ending 30 June (FY21).
GWA share price flying higher on dividend boost
Reported net profits after tax (NPAT) – including significant items – of $35.1 million, down from $43.9 million in FY20.
Earnings before income and taxes (EBIT) before significant items fell 4.7% to $68.5.
Group revenue increased by 1.8% to $405.7 million.
Operating cashflow increased 16% to $103.1 million.
The company declared a final dividend of 6.5 cents per share. That brings the full-year dividend to 12.5 cents per share, fully-franked, an increase of 9% from FY20.
What happened in FY21 for GWA Group?
GWA pointed to improved residential construction activity in Australia in the second half of the financial year along with strong sales growth in its New Zealand and United Kingdom segments as helping drive the increased revenue.
It said significant items during the year included the costs to consolidate its New Zealand warehouses; the sale of its China plant; Methven integration costs; and Enterprise Resource Planning /Customer Relationship Management systems’ project costs.
Over the year the company continued to launch new ranges of taps, showers, accessories and sanitaryware.
For investors wanting to get the final dividend, the record date for the final dividend is 8 September 2021, with the payment date on 6 October.
What did management say
Commenting on the results, GWA’s CEO, Urs Meyerhans said:
This provides a strong platform for GWA to leverage an expected continued improvement in residential detached construction markets in FY22.
We continue to enhance the diversity of our revenue and earnings base with strong growth in our New Zealand and international businesses. The delivery of integration synergies and enhanced geographical revenue and earnings diversification reinforces the success of the Methven acquisition.
Meyerhans added that the company’s Caroma GermGard antibacterial glazing to sanitaryware products is capitalising on “consumers’ heightened concerns over safety and hygiene following the COVID-19 pandemic”.
What’s next for GWA?
Looking ahead, GWA cautioned that the outlook for construction markets remains uncertain due to continued COVID-19 lockdowns in Australia’s biggest cities. The company pointed to international border closures as likely to negatively impact its multi-residential segment with decreased migration levels.
On a more upbeat note, improved consumer sentiment, increased dwelling approvals, new housing loans, higher housing turnover and government stimulus via the HomeBuilder package are expected to drive activity in its residential detached segment in FY22.
It expects its renovation and replacement activity, to be “stable or slightly positive” for both residential and commercial customers.
The GWA share price is up 18% over the past 12 months.
Should you invest $1,000 in GWA right now?
Before you consider GWA, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and GWA wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.