Dulux denies retail price war in the cheap paint Dulux's underlying net profit has jumped to $111.9 million. Photo: Viki Lascaris Dulux Group managing director Patrick Houlihan has brushed off concerns about a retail price war in the cheap paint segment as he unveiled a 21 per cent jump in the paint maker's underlying net profit to $111.9 million. Last year Dulux pulled its premium paint and woodcare products including the Dulux and Cabot's brands from the shelves of Woolworths' struggling hardware chain Masters. Dulux still sells its Selleys and Yates brand lines through Masters but its top-end paints, which are the core of group earnings, go to Bunnings. Morgan Stanley analyst James Rutledge estimates that 4 litres of Dulux Spring Paint sold at Bunnings for $32 before low-priced Pascol paint was brought into Masters around October. Since then the price of Spring Paint has been cut to $17.50. But Mr Houlihan quashed concerns that discounting of low price-point paints could hurt Dulux. Cheap low quality paint is less than 5 per cent of overall volume and two per cent of the market by value. There's always been cheap paint in the market," he said. He said more than 90 per cent of market value is in premium paints and there is no sign of that changing. He said he pulled his paints from Masters because Woolworths was "disproportionately favouring" rival Wattyl. Deutsche Bank analyst Mark Wilson said he remains wary of discounting in the Australian architectural and decorative paint segment. A key risk highlighted by analysts is the widening of price competition to premium paints. Dulux on Wednesday reported an 8.5 per cent rise in revenue for the 2013-14 year to $1.6 billion and a 19.4 per cent rise in earnings before interest and tax to $183.8 million. The company declared a final full-franked dividend of 10.5¢ per share. The result was buoyed by increased sales and margins and the first full-year contribution from recently acquired garage door business Alesco. Including one-off items such as Alesco integration costs and an impairment charge against Dulux's small China business, net profit was $104.5 million. Statutory profit in 2013 was also hit by $17.2 million of one-off items. After a long takeover scrap Dulux took control of Alesco in late 2012 for an enterprise value of $260 million. Mr Houlihan said the company has extracted $9 million in synergies from the deal so far and the integration is largely complete. "We still see plenty of upside," he said. Group net debt fell from $389 million to $346 million as at September 30, providing headroom to invest. Mr Houlihan said he "absolutely" looks at mergers and acquisitions. He said bolt-on buys in speciality coatings and construction chemicals, and deals that bolster Dulux's home improvement offerings are possibilities. Subject to economic conditions, Dulux expects profit in the 2014-15 year to be higher than $111.9 million. Dulux shares fell 1¢ to $5.59 on Wednesday.