Dulux Group Australia positive about outlook

Patrick Houlihan, CEO of Australia's largest paint company, Dulux Group, says while the Australian new housing market is in a "late cycle" position and coming off its peak it is still expected to remain relatively strong, while homeowners repainting existing houses will deliver solid growth.

Mr Houlihan confirmed that 65 per cent of the company's end market exposure came from maintenance, home improvement and renovations in Australia, and would continue to be a robust driver of the business.

On Thursday the company announced a 9% rise in first half net profit after tax for the six months ended March 31 to $79.2 million, while revenues increased 4.2% to $918 million. The company lifted its first half dividend by 7.7% to a fully franked 14.0¢ per share, to be paid on June 12.

Dulux continues to work closely with Wesfarmers in the UK, which has made a big bet on the UK hardware market with the acquisition of the 244-store Homebase chain in early 2016 as it tries to build a profitable Bunnings business in the UK.

Dulux currently has a range of branded paint and Selleys Dec'sundries products in the Bunnings and Homebase UK stores. Wesfarmers is currently weighing up whether it should continue with the hardware chain, which is struggling to make headway and is a big drag on the broader Wesfarmers. An update is expected at the Wesfarmers annual strategy day, planned for 7th June.

Mr Houlihan said he was hopeful that Wesfarmers would persist with the UK plans "If Bunnings continues we would welcome that," Mr Houlihan said.

It provided a "pathway" for the Selleys business in particular in the UK, but he emphasised that the UK was only a small part of the overall Dulux operations and that if Bunnings did shut down in the UK there were other options. "We were on the ground there in terms of our own activities before Bunnings turned up," Mr Houlihan said.

In Australia, Mr Houlihan said the 10 million dwellings in Australia, which are older than 20 years, will keep providing a robust platform for the Dulux operations to thrive.

Source: Insight DIY International Team

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