GUD's Ian Campbell. Photo: Tony Feder
GUD Holdings, the manufacturer and wholesaler of toasters, kettles and coffee machines, water pumps, locks and car equipment, has detected what it believes are the early signs of a rebound in business spending despite enormous uncertainty pervading the consumer sector.
Managing director Ian Campbell said forward orders for GUD's Dexion business, which makes heavy-duty racking and storage equipment for retailers, had jumped sharply in the past three months, taking its book of orders to about $60 million compared with $20 million during 2011. ''All of a sudden, demand has lifted,'' Mr Campbell said.
''I don't believe it's got anything to do with the interest rate cut [in early December]. People just tend to put stuff off and you get this pent-up demand.''
But the perceived sparkiness at the business end of the economy certainly is not yet reflected among consumers who, Mr Campbell suggested, remained highly wary about the outlook.
'''Flakey' is a kind description - jeez, it's been hard,'' Mr Campbell told The Age.
''Consumer sentiment has just been awful and the only saving grace is we've had one interest rate cut.''
Mr Campbell suggested the catalyst that might ''break the logjam'' and stir consumers into spending again would be another couple of cuts to official interest rates.
But while he does not expect consumer trading conditions will get worse from here, nor does he anticipate much change from the doleful tempo that has plagued so many retailers for the past 15 months.
GUD's December half-year profit figures, released yesterday, show group sales rose 8 per cent to $311.1 million but revenue from the Sunbeam electrical appliances unit fell, triggering a 15 per cent drop in that division's gross profit to $19.3 million.
Sunbeam is selling more items but at lower prices as it tries to hold its place on retailers' shelves amid tough competition from imports. Mr Campbell said prices were not likely to fall much further.
At the same time, the soaking wet weather along Australia's east coast has stymied sales of watering and pumping products in GUD's Davey division.
Across the group, pre-tax profit slipped from $34.8 million to $32.06 million in the six months to December 31 as costs rose.
GUD has told shareholders to expect profit before tax and interest to be slightly ahead of the $77.1 million reported for 2010-11. That is predicated on Dexion generating strongly in the next few months and the automotive division continuing to build ''solid'' profits.
GUD lifted its interim dividend by 1¢ to 30¢, fully franked - a payout ratio representing 88 per cent of its $23.04 million net profit. The dividend is payable on March 6 to shareholders registered by February 20.
GUD shares eased 4¢ to close at $7.31. A year ago the stock was trading above $9.50.
