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Why the GWA Group (ASX:GWA) share price has gained 52% in six months

The GWA (ASX: GWA) share price has been climbing for 6 months. Let’s look at the half-year results to see what’s driving the trend.
The post Why the GWA Group (ASX:GWA) share price has gained 52% in six months appeared first on The Motley Fool Australia. –

Water tap with dollar sign

The GWA Group Ltd (ASX: GWA) share price has been sneaking up over the past 6 months, gaining more than 52% despite challenging market conditions.

However, shares in the water solutions product provider have dipped today, dropping 1.35% at the open to $3.66.

Let’s review some highlights from the half-year results released today to see what drives the GWA share price.

GWA Group financial results

For the half-year period ended 31 December 2020, GWA’s normalised net profit after tax was $20 million, a 17% dip compared to the previous corresponding period (pcp).

GWA grew revenue in New Zealand and the United Kingdom, but this was offset by the weaker Australian market. Group revenue for the half-year period slid 4.4% to $197.2 million.

GWA advised that these losses reflected an overall decline in market conditions.

However, despite the challenges, operating cash flow jumped 18% to $49.7 million.

The company also reduced its net debt from $144.8 million on 30 June 2020 to $125 million on 31 December 2020.

The GWA interim dividend paid out will be 6 cents per share, fully franked, payable on 20 April 2021. This compares to 8 cents per share for the pcp and 3.5 cents per share for the final dividend for FY20. 

Positioning GWA share price for growth

GWA advised that it continues to execute its growth strategy as market conditions improve. Commenting on what lies ahead, managing director Tim Salt said:

We launched new ranges of taps, showers, accessories and sanitaryware under the Caroma brand in Australia and New Zealand and new Methven showerware ranges in Australia, New Zealand and China.

We introduced Germgard® antibacterial glazing to our sanitaryware to capitalise on consumers’ heightened concerns over safety and hygiene following the COVID-19 outbreak.

Meanwhile, our touchless intelligent bathroom system, Caroma Smart Command®, continues to represent a growth opportunity in the commercial segment.

The system has now been successfully installed in 77 sites with a solid bank of additional projects in the pipeline. We have completed the first pilot installation in Asia with further activity planned over the next year.”

The GWA share price is closing in on the same price levels it was trading at a year ago, and is now down just 4.8% over the previous 12-month period.

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Motley Fool contributor Gretchen Kennedy 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.

The post Why the GWA Group (ASX:GWA) share price has gained 52% in six months appeared first on The Motley Fool Australia.

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