Metro Performance Glass is a 30-year-old New Zealand glass supply company with over 900 employees.
Yesterday morning its NZX share price opened at 40 cents, down from 54 cents on Friday. This is the second fall for the company this month — falling from 84 to 69 cents on 19 November, and steadily declining since.
What caused the fall?
It hasn’t been a good year for Metro Performance Glass.
Despite a small increase in first-half revenue to $113 million in New Zealand, Australian revenue fell 7.1% leading to a $1.3 million loss.
The earlier drop was triggered by the announcement that Architectural Profiles was intending to enter the glass supply business.
The combination of upcoming competition and a decline in profitability has slashed the typically reliable value of the stock, dropping over 50%.
What’s next for [NZX:MPG] shares?
The idea of upcoming competition is concerning for investors. However CFO John Fraser-Mackenzie says Architectural Profiles will struggle to develop the IP necessary for the factory, which is intended for operation in 2020.
As for the revenue issues — Fraser-Mackenzie states that he expects ‘slight recovery’ for Australian production in the second half year but isn’t expecting profitable growth before 2020.
2020 will be an important year for Metro Performance Glass based on these statements. At the moment the share price is recovering but still at a low value.
It is unlikely that it will reach its previously stable >$0.70 price, especially once Architectural Profiles gets off the ground, but it should see a slow increase before then.
Regards,
Taylor Kee,
Editor, Money Morning New Zealand
Taylor Kee is the lead Editor at Money Morning NZ. With a background in the financial publishing industry, Taylor knows how simple, yet difficult investing can be. He has worked with a range of assets classes, and with some of the world’s most thought-provoking financial writers, including Bill Bonner, Dan Denning, Doug Casey, and more. But he’s found his niche in macroeconomics and the excitement of technology investments. And Taylor is looking forward to the opportunity to share his thoughts on where New Zealand’s economy is going next and the opportunities it presents. Taylor shares these ideas with Money Morning NZ readers each day.