Metro Performance Glass Limited Analysis

Overview

Metro Performance Glass Limited produces a range of customised glass products that are predominantly used in residential and non-residential construction applications such as windows, doors, internal partitions, balustrades, facades, showers, mirrors, furniture and splashbacks.

Metroglass is the New Zealand market leader in the value added glass processing market with a circa. 50% market share and is twice the size of its nearest competitor by market share. Metro Performance Glass market leadership is supported by a number of competitive advantages that have been developed over more than 30 years, including its high customer service standards, manufacturing capability and scale, distribution footprint, product offering and glazing capability.

Metroglass also operates in Australia through Australian Glass Group, which has glass processing operations in Victoria, New South Wales and Tasmania.

MPG listed on the NZX Main Board on 30 July 2014.

Performance

The following information was extracted from Metro Performance Glass's half year results, released on 28 November 2024:

Our revenue was down to $114 million, but in line with what we presented at the AGM, translating to a loss of $5 million. Our net debt increased from $53m to $55.2m, again as we suggested at AGM.

As predicted, there has been a fall in demand across the sectors we operate in. We are confident however that it doesn’t reflect in market share, in so much as our revenue drop is less than the market fall and we have in fact increased market share.

When I think about the business performance, I do not dwell a great deal on the market. Our focus has been on our turnaround and the restructuring, reducing our cost base and our market positioning for success in the future. We are focused on getting quality product to our customers in full and on time.

Of course, we need the right capital base, which we have talked about. The business has too much debt for this stage of the economic cycle. It also continues to carry too much debt for what is a smaller NZ business, having lost market share and consequently revenue over the last few years in a very different competitive landscape.

Our primary responsibility is to understand and build a predictable and profitable business. We will not ask our shareholders for more capital to reduce debt, without confidence in our ability to deliver future returns, and we are confident.

Our turnaround plan has been simple. Restate and confirm Metro’s commitment to be the best quality processed glass and the highest service levels in the market. With the pressure on our selling price, it was hard to fight for our market share with low service levels. In addition, we must reduce our cost and financial shape to ensure that we are ready and profitable at the bottom of the market cycle.

We have taken cost out where we can and continue to remain committed to this. We have finalised the closure of two larger processing factories and relocated and scaled into a smaller footprint with another one pending. We have taken circa $3 million of cost out in FY25 and a further $3 million looking forward to FY26.