Plumbing supplier’s green shoots snipped by rate hike
The iconic Australian business, whose fortunes depend on the health of the building and renovation market, is cautious about its outlook following the latest interest rate rise.
Plumbing, bathroom and commercial supplier Reece reported on Monday that its first-half net profit fell 20 per cent to $144.2 million.
The result reflected weak housing market conditions nationwide and in the U.S. in the six months ending in December.
The 126-year-old company, which started as a single hardware store in Melbourne’s Caulfield, has recently noticed green shoots on the horizon.
But CEO Peter Wilson told analysts on an earnings call, “We’re not making this big of a recovery and off to the races.”
“We were just starting to see green shoots and then the interest rate hike happened.”
The Reserve Bank of Australia raised interest rates for the first time in two years earlier this month and there are expectations that further increases are on the way.
Reece said its main Australia and New Zealand business had had a mixed performance, while its US operation, established eight years ago through the acquisition of the Morsco business, had been affected by affordability issues in the new home construction sector.
“Looking ahead, we remain cautious about the pace of the recovery and do not expect any significant change in demand for the remainder of the 2025/26 financial year,” Mr Wilson said in a statement.
Reece’s shares rose 15 percent to $16.04 in morning trading.
Reece’s underlying earnings before interest and tax also fell 14 percent to $262 million as network expansion costs in the U.S. rose, but that growth helped sales rise almost six percent to $4.6 billion.
The company’s revenue from Australia and New Zealand amounted to $179 million, while the US generated $55 million ($78 million).
Full-year earnings before interest and taxes are now estimated to be in the range of $520-$540 million. This figure will be lower than $548 million in 2024/25.
Reece announced a first-half dividend of 5.44 cents per share; This figure was down from 6.5 cents in the previous period.
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