Business Description:
DuluxGroup Limited (DLX) is a manufacturer and marketer of premium branded products, mainly in coatings, home improvement, and garden care markets. DLX was formed following its demerger from Orica Limited in July 2010 and consists of four business segments: Paints Australia, Paints New Zealand, Selleys Yates and Offshore. The company employs approximately 2,500 people in Australia, New Zealand, Papua New Guinea, South-East Asia and China.

Strategy Analysis:
DLX's strategy to protect and expand the market leading positions occupied by many of its brands in Australia and New Zealand. DLX´s focus is primarily on the premium end of the decorative paints and coatings market, ensuring a level of resilience during periods of weaker economic conditions DLX's growth strategy involves small bolt-on acquisitions in the higher growth domestic home improvement and garden care sectors. Management have the skill and knowledge to ensure a high probability of success in undertaking this strategy. Further investment in the Chinese operations is also anticipated, which we remain cautious on given the challenging market conditions. The company has built an extensive distribution network of retail outlets through strong relationships with key players in the hardware and supermarket sectors. Future acquisitions which complement the distribution network are anticipated. DuluxGroup reported NPAT up 52% to $93.24m for the year to 30 September 2011, inclusive of a one-off tax consolidation adjustment of $12.5m and a $4.5m ($3.1m after tax) uplift relating to insurance income associated with the Rocklea flood. Revenues from ordinary activities were $996.43m, up 28% from last year. Diluted EPS was 25.7 cents compared to 16.9 cents last year. Net operating cash flow was $86.06m compared to $10.70m last year. The final dividend declared was 7.5 cents, taking the full year dividend to 15 cents compared with 3 cents last year. Subject to economic conditions, the Company expects 2012 DuluxGroup underlying NPAT to be higher than that reported in 2011 ($77.6m).