The Reliance Worldwide Corporation (ASX:RWC) share price was trading 27.53% lower today following the release of its 2020 half-year financial report.
For context, the broader Australian share market or S&P/ASX 200 (ASX: XJO) was trading at 6994.5, down 2.02%.
About Reliance Worldwide Corporation
Reliance Worldwide Corporation is an Australian plumbing supplies and water solutions business, perhaps best known by plumbers for its SharkBite pipe connector. It is the world’s largest manufacturer of push to connect plumbing fittings and specialist water control valves.
Featured video: underlying v. statutory financial results
In the Rask video above, I explain the difference between ‘underlying’ results and ‘statutory’ results. Knowing the difference between these two numbers is essential to understanding a financial report. Take one of our free finance courses by clicking here.
RWC’s Key Results
| This period | Last period | Change | |
| Revenue | 569.3 | 544.2 | 4.61% |
| Profit | 50.1 | 65.7 | -23.74% |
| Cash flow | 112.8 | 42.9 | 162.94% |
| Dividends (cents) | 4.5 | 4 | 12.5% |
Source: Reliance Worldwide Corporation announcements; author calculations, AUD millions.
As can be seen above, RWC’s revenue came in at $569.3 million, up $25.1 million. While the top line (revenue) grew, management said the result could have been better but for a slow-down in remodelling work in the USA, a weaker-than-anticipated Australian construction market and volatile trading conditions in the UK.
RWC’s profit was $50.1 million, down $15.6 million. Indeed, looking a little deeper into the result, it was clear the uncertainty of Brexit weighed on performance. And adjusting for the acquisition of the UK’s John Guest in 2018’s results, RWC’s adjusted profit would have been $63.7 million.
On the cash flow statement, which is an important financial statement since it represents the underlying health of a business, operating cash flow was $112.8 million, up $69.9 million. This helped the company reduce its net debt.
Finally, dividends declared by the company stood at 4.5 cents, up 0.5 cents per share.
What Happens Next?
With regards to the business outlook, RWC now expects to report an adjusted net profit of between $140 million and $150 million for the full year, compared with the $150 million to $165 million range previously quoted to the market.
The outlook includes a number of assumptions, such as deriving more synergies from the John Guest tie-up and stable commodity prices. Unfortunately, the company expects a negative impact as a result of the Brexit and is monitoring its manufacturing capabilities and supply out of the Coronavirus-affected Chinese manufacturing sector.
Reliance Worldwide Corporation shares were last seen trading at $3.37, giving the company a market capitalisation more than $2 billion.
[ls_content_block id=”14948″ para=”paragraphs”]
