Building materials suppliers, GWA, today reported interim results which were arguably a bit pedestrian given the apparent strength is the residential construction market:
GWA Group Revenue was up just 2%, despite a price increase put through in October.
In the company's Bathrooms and Kitchens division (i.e., sanitaryware and tapware), Revenue was up 2.6%, despite a 3% price increase put through during the half. Also, GWA says it gained market share, implying market volumes contracted.
Of course, DLX does not supply toilets, basins and taps so it is not a direct competitor to GWA, but the end markets for both companies is the Renovation sector, so this result from GWA points to a market that is slowing.
And then, what is more directly relevant to DLX is an part of the market where they do, in fact, compete directly with GWA, namely in the garage doors sector.
Revenue in GWA's Door and Access Systems fell 2% (again, despite a price increase put through during the half).
By contrast, DLX's Garage Door business - which is twice as big as GWA's in terms of sales revenues and higher EBIT margins - increased Revenue by 2.7% in the half-year to Sept, 2017 (so, while not quite a directly comparable period, still sufficiently so to get a feel for the disparate performances of these two businesses).
Consequently, GWA has put its garage doors business up for sale (having window-dressed for sale it in the last half with an increase in the EBIT margin to 8.6% (from 5.0% in the pcp).
All-up from the GWA result is that the read-through for DLX is not very positive in terms of the underlying market strength (then again, GWA is merely one piece of the construction industry jigsaw puzzle, so I'm not sure how much store of value to set by it).
DLX Price at posting:
$7.28 Sentiment: None Disclosure: Held
