Rocketing renovation market boosts Reliance Worldwide profits

Global bathroom fixtures business Reliance almost doubles its half year profit thanks to the pandemic surge in home renovations.

Heath Sharp, CEO of Reliance Worldwide. Picture: Jeremy Piper

The COVID-crisis continues to pay dividends for Reliance Worldwide, as businesses exposed to the exploding at-home market continue to reap ramped-up revenue from renovation sales.

The global home and bathroom fixtures business almost doubled its net profit for the half year following a boom in renovations.

This is despite experiencing months in some countries of tradespeople unable to work in homes as well as serious disruptions to manufacturing and distribution caused by the virus.

The company reported a sales increase of 13 per cent to $642.4m over the previous corresponding period.

Net profit after tax rose 82 per cent to $91.4m as cost reduction initiatives lifted margins.

Reliance declared an interim dividend of 6c, up 33 per cent.

The business also paid its deferred dividend from 2020, expanding outflows.

Reliance’s American division was its strongest, with sales growing 22 per cent on a constant currency basis.

Asia-Pacific sales on a constant currency basis grew 14 per cent, while European, The Middle East and African sales lifted by 10 per cent.

Reliance CEO Heath Sharp said the business had experienced a huge trough-to-peak ride through the pandemic, at one point standing down 400 staff in its UK operations.

Reliance factory operations in Europe and US were disrupted by the spread of COVID-19.

Almost 100 Reliance staff are known to have contracted the coronavirus and many more forced into isolation by the spread of the disease.

The company has paid all staff forced to isolate, with $2.1m in reported costs arising from COVID.

Mr Sharp said Reliance expected disruptions to decline as the rollout of the vaccine reached staff.

“We haven’t had any of our people become eligible (for a vaccine), but we’re getting really close in the US and the UK,” he said.

The company did not provide formal guidance for the full year.

“Sales on a constant currency basis were 14 per cent higher than for the same month last year and 24 per cent higher on a daily sales basis,” Mr Sharp said.

“We have continued to see positive sales growth in all regions during the first half of February.”

Reliance flagged the recent wave of extreme weather in the US as likely to significantly boost business across country in coming weeks.

Boosted homebuilding in Australia is also expected to continue to buoy returns.

However, a looming jump in the price of copper, a key ingredient in brass objects manufactured by the business, has Reliance on edge.

“We do expect to see some cost pressures impacting our second half performance,” Mr Sharp said.

He added that Reliance would look to expand its plastic products to offer low-cost alternatives to customers.

“The plumbing industry is a very conservative industry which is both helpful and a challenge, he said.

“Brass plumbing products will still be sold, I would say in the majority in 20 years time.

“Over that period we will alter the design to change the content of different materials.”

Shares closed on Monday down 2.5 per cent at $4.60, 12c lower for the day.