Renovators to cushion Reliance plumbing supply group

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Reliance raised prices by 9.5% in 2021-22 to recover from raw material cost inflation in copper, resins and steel, and signaled that it was watching closely to see if further increases in prices would be required.

Finding a good plumber to do a big renovation is always a difficult task, and Reliance Worldwide boss Heath Sharp says that’s a good sign for pent-up demand.

Reliance said on Monday that net income for 2021-22 fell 2.6% to $137.4 million, with revenue up 17% to $1.17 billion, buoyed by the purchase of the EZ-Flo activity. It kept its final dividend steady at US5¢.

Shares of Reliance slid more than 5% to $4.24 in late trading on the ASX on Monday. The stock was above $6 in mid-January. Reliance, built by the Munz family of Melbourne since the mid-1980s, listed on the ASX in 2016 in the biggest public float of that year.

Rich Lister Jonathan Munz sold his last 10% stake in Reliance in early 2019.

Mr Sharp said the company is paying more attention to overtime and discretionary spending in case business conditions ease further.

“I think we know what to do if we need to,” he said.

The group’s Americas business accounts for approximately 50% of total revenue, with the company’s flagship product being the Sharkbite range of brass push-to-connect fittings, which has made headway as it saves plumbers time, avoiding the traditional welding of parts in place. .

About 2,000 shipping containers of Sharkbite were exported to the United States from a factory in Melbourne during the year. Mr Sharp said that over the past six years, the market share of push-to-connect fittings in the United States has grown from around 10% to 15% and the group is still at the forefront. keep to sell his virtues. “There is no magic formula,” he said.

Mr Sharp said professional plumbers still had large backlogs in the US and Australia.

“We expect the volume of repairs and renovations to remain stable this year, given the backlog,” he said.

Reliance said major U.S. retailers and other resellers were beginning to order fewer accessories from the group because they had excess inventory as a deliberate strategy over the past year as a buffer against product supply delays. amid supply chain disruptions. He called this additional inventory “safety stock”.

“That is now unfolding as the outlook softens,” he said. The company was monitoring point-of-sale data at retailers very closely and indicated stable demand.

The company made a big bet in 2018 on overseas expansion when it spent $1.2 billion to acquire the John Guest business in the UK.

But operations in the UK and Europe are the worst performers of the three main geographies, with sales up 1%, compared to 6% in Asia Pacific and 26% in Americas.

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