Reliance Worldwide (SAX: RWC) slumps after reaffirming guidance
Stock
Reliance Worldwide (ASX: RWC) $4.65 as at 1/02/2019
Event
Plumbing product manufacturer Reliance slumped today, giving back some of the strong rally it experienced this week. Reliance had been bid up in anticipation of the material upgrade coming, driven by the big freeze that has encompassed the US.
The company however reaffirmed full year EBITDA guidance of $280-$290m, in line with expectations of $287.7m. RWC did note that freeze events do deliver a boost to earnings with the increased demand for new pipes and plumbing, and would likely see a 1.5-3% hit to the result “if a modest freeze event is not experienced in the USA.”
Reliance benefit more from a freeze event in the south of USA, and although the vortex over the country is large, the south has been somewhat insulated thus far.
The company noted two other impacts to the result, causing a larger than usual second half skew to earnings. The John Guest acquisition will only partially contribute to the first half numbers, and the copper price slide into the second half will help reduce costs on the business there.
Reliance Worldwide (ASX: RWC) Chart
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