Probably too many open questions and issues:
- Confirmation that NZ NPAT is dropping (only Australian revenue helps them to keep it flat) is not good (though sort of expected).
- good that the chair does not want to stand anymore - but hasn't he just started a new 3 year term?
- the next plant refurbishment period is "ante portas". Last time this happened (a year ago) was quite margin depressing ...
I did some more thinking about the NZ building industry and there is in my view one other issue which is likely to longterm impact on their revenues and margins:
NZ houses are at current ridiculously expensive compared to buildings in other parts of the world. One of the reasons: Our houses are - despite looking all the same - hardly size standardised. Referring to windows this means that you can't buy them at Bunnings, but each window is basically differently sized and a one-off product. Same cr*p frame for each window, but each measure is different making them expensive to manufacture and keeping overseas competition to the detriment of the NZ consumer at bay.
I my view one of the main methods to reduce building costs in NZ (and at the same time increasing the quality) is to create a number of "standardised" building blocks which can then be cheaply and in large volumes manufactured. Windows are one of these components. As soon as they sell say 50% of all new windows in just 3 different sizes it is very easy to buy these windows cheap anywhere in the world.
If this happens, than MPG will inevitably lose market share to overseas competitors and on top of that will lose margin for the remaining product.
I am sure they will survive (still lots of replacement business - and room to reduce the margins), but I don't take it anymore for granted that they will soon return to their previous growth rates ... and I think a further margin reduction is more likely than not.
Look what difference a lost endowment effect can do to your thinking
... but on the other hand do I now probably suffer under confirmation bias - i.e. better DYOR;
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