- Email: [email protected]
GUD Holdings Ltd, Australia
December 2005
Filtration Industry Analyst
GUD Holdings Ltd, Australia Profile GUD Holdings Limited is an Australasian manufacturing and marketing company operating in a number of consumer and industrial markets. Its business segments include the automotive pProducts unit that encompasses Ryco, Cooper and Wesfil air, oil and fuel filters and Goss replacement fuel pumps. It also has a water products division whose products include Steriflo and Filterpure water treatment systems, as well as pumps and other systems. Its other two business units are consumer products and security products.
COMMENT With a large portfolio of consumer and trade brands, GUD Holdings’ strategy looks to integrate the various demands of manufacturing, sourcing, supply chain and brand management across both its existing businesses and acquisitions. This strategy revolves around a commitment to undertake ongoing reviews of its operational profile as macro economic conditions change, and to make the transformations necessary to ensure long-term profitability. It was this philosophy that saw the company cease the manufacture of automotive filters in Australia in early calendar 2005. The need for this change reflects the fact that the Australian aftermarket industry continues to undergo restructuring and rationalisation. In conjunction with its initiatives to ensure cost competitiveness, Ryco’s market strategy has been to reinforce its technical advantage over lower quality, imported products, as well as establishing pull-through demand by being the filter of choice in major automotive servicing chains. GUD Holdings is already a distributor of imported filters through its Wesfil operations, which made good progress in 2004/05. Having completed the establishment of a national distribution network during the previous year, Wesfil saw its profit margins improve and is now looking for further expansion opportunities. GUD Holdings is confident that its water products business is poised for further strong growth in 2005/06 building on its strong Davey brand name. During the year, the company plans to launch its Steriflo and Filterpure ranges in its Davey’s sales channels. ■
Key figures (A$ million) GUD Holdings
Year ended 30.6 2005
2004
2003
2002
2001
394.4
393.8
372.4
365.9
341.2
Trading EBITA* Of which: Automotive products Water products
63.5
67.1
47.5
37.8
26.6
17.7 11.1
18.8 8.6
15.4 7.7
13.2 5.9
9.7 4.8
Net profit before tax
42.2
51.3
33.6
9.1
17.2
Net profit after tax
28.9
35.5
21.8
6.4
10.7
Sales revenue
*Earnings before interest, taxes and amortization – results exclude individually significant Items.
Contact details Managing Director: Chairman: Address:
Ian Campbell Clive Hall 245 Sunshine Road Tottenham Victoria 3012 Australia
Tel: +61 3 9243 3333 Fax: +61 3 9243 3300 Web: www.gud.com.au
7
COMPANY PROFILE
Analysis GUD Holdings enjoyed a solid 2004/05, although tougher economic conditions in Australasia meant its results were below those of the record setting 2003/04. Sales revenue was essentially flat at A$394.4 million, while net profit before tax was down 18% to A$42.2 million (although the latter figure was still the second highest in the last five years).GUD Holdings’ filter interests are concentrated primarily in its automotive products division that saw a tough and competitive market in 2004/05, with sales down 9% on the previous year. The company said that the demand for service parts in Australia and New Zealand, including filters, appeared to have weakened as the effects of buoyant new car sales, high petrol prices and longer servicing intervals became apparent. Additionally, imports continued to grow market share across all filter categories in both markets. Reflecting these factors, GUD Automotive deciding during the year that Ryco Australia could not continue to operate viably in the long term as a local filter manufacturer. Consequently, the business was converted fully to an import sourcing operation. The cost of this transition was reflected in the A$12.6 million pre-tax (A$8.8 million after tax) restructuring charge, disclosed as an individually significant item in the annual accounts. GUD Holdings also has some filter interests in its water products segment, which saw solid growth in both sales and profitability during 2004/05. The company said the result came from a combination of new products driving growth in its principal Davey business and recent acquisition activity.
Filtration Industry Analyst
GUD Holdings Ltd, Australia Profile GUD Holdings Limited is an Australasian manufacturing and marketing company operating in a number of consumer and industrial markets. Its business segments include the automotive pProducts unit that encompasses Ryco, Cooper and Wesfil air, oil and fuel filters and Goss replacement fuel pumps. It also has a water products division whose products include Steriflo and Filterpure water treatment systems, as well as pumps and other systems. Its other two business units are consumer products and security products.
COMMENT With a large portfolio of consumer and trade brands, GUD Holdings’ strategy looks to integrate the various demands of manufacturing, sourcing, supply chain and brand management across both its existing businesses and acquisitions. This strategy revolves around a commitment to undertake ongoing reviews of its operational profile as macro economic conditions change, and to make the transformations necessary to ensure long-term profitability. It was this philosophy that saw the company cease the manufacture of automotive filters in Australia in early calendar 2005. The need for this change reflects the fact that the Australian aftermarket industry continues to undergo restructuring and rationalisation. In conjunction with its initiatives to ensure cost competitiveness, Ryco’s market strategy has been to reinforce its technical advantage over lower quality, imported products, as well as establishing pull-through demand by being the filter of choice in major automotive servicing chains. GUD Holdings is already a distributor of imported filters through its Wesfil operations, which made good progress in 2004/05. Having completed the establishment of a national distribution network during the previous year, Wesfil saw its profit margins improve and is now looking for further expansion opportunities. GUD Holdings is confident that its water products business is poised for further strong growth in 2005/06 building on its strong Davey brand name. During the year, the company plans to launch its Steriflo and Filterpure ranges in its Davey’s sales channels. ■
Key figures (A$ million) GUD Holdings
Year ended 30.6 2005
2004
2003
2002
2001
394.4
393.8
372.4
365.9
341.2
Trading EBITA* Of which: Automotive products Water products
63.5
67.1
47.5
37.8
26.6
17.7 11.1
18.8 8.6
15.4 7.7
13.2 5.9
9.7 4.8
Net profit before tax
42.2
51.3
33.6
9.1
17.2
Net profit after tax
28.9
35.5
21.8
6.4
10.7
Sales revenue
*Earnings before interest, taxes and amortization – results exclude individually significant Items.
Contact details Managing Director: Chairman: Address:
Ian Campbell Clive Hall 245 Sunshine Road Tottenham Victoria 3012 Australia
Tel: +61 3 9243 3333 Fax: +61 3 9243 3300 Web: www.gud.com.au
7
COMPANY PROFILE
Analysis GUD Holdings enjoyed a solid 2004/05, although tougher economic conditions in Australasia meant its results were below those of the record setting 2003/04. Sales revenue was essentially flat at A$394.4 million, while net profit before tax was down 18% to A$42.2 million (although the latter figure was still the second highest in the last five years).GUD Holdings’ filter interests are concentrated primarily in its automotive products division that saw a tough and competitive market in 2004/05, with sales down 9% on the previous year. The company said that the demand for service parts in Australia and New Zealand, including filters, appeared to have weakened as the effects of buoyant new car sales, high petrol prices and longer servicing intervals became apparent. Additionally, imports continued to grow market share across all filter categories in both markets. Reflecting these factors, GUD Automotive deciding during the year that Ryco Australia could not continue to operate viably in the long term as a local filter manufacturer. Consequently, the business was converted fully to an import sourcing operation. The cost of this transition was reflected in the A$12.6 million pre-tax (A$8.8 million after tax) restructuring charge, disclosed as an individually significant item in the annual accounts. GUD Holdings also has some filter interests in its water products segment, which saw solid growth in both sales and profitability during 2004/05. The company said the result came from a combination of new products driving growth in its principal Davey business and recent acquisition activity.