Good day, and welcome to the Metro Performance Glass FY 2024 interim results conference call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Mr. Simon Mander, CEO of Metro Performance Glass. Please go ahead, sir.
Good morning, everyone. Welcome and thank you for joining our call today. My name is Simon Mander, and I'm the CEO of Metro Performance Glass. With me is our CFO, Tony Candy. This morning, we will provide you with an overview of the group's results for the six months to the 30th of September 2023, and then we'll be happy to take any questions that you may have. We'll start now on slide 2, where we've noted our key messages that summarize the first half of the year. The group delivered earnings in line with August guidance, supported by solid profitability in Australia. Residential construction sector softness impacted the New Zealand business. New Zealand construction sector softness impacted glass demand and revenue, partially offset by the increase in high-value, Low-E sales. Easing supply chain costs helped drive margin recovery.
AGG delivered a resilient performance and further profitability growth in the first half, supported by continued demand for high-performing double glazing. Australian Glass Group divestment continues to advance. Moving to our key financial results for the first half on slide 3, group EBIT before significant items of NZD 7.5 million was an increase of 33% on the prior comparable period, as improved pricing and supportive sales mix was offset by the softer market. Net debt decreased by NZD 6.3 million to NZD 52.8 million, driven by reductions in working capital. Our leverage ratio improved to 2.69 times from 3.8 times. Now, on slide 4, New Zealand revenue of NZD 87 million was 13% lower than the prior comparable period, with an EBIT before significant items of NZD 3.2 million, down 9%.
All segments were impacted by the general softening across the market and lower glass demand. The square meters of glass processed being 25% lower in the first half of FY 2024 compared to the prior year. In the residential segment, which is new builds, revenue was down 16%, primarily as a result of the lower activity. However, this was partially offset by the increased Low-E glass sales. Low-E, as part of the sales mix, has shifted from approximately 28% in the first half of 2023 to 43% in the first half of FY 2024. Commercial segment has remained steady, but it's taking longer for contracts to convert, and in the retrofit business, cost of living and interest rate pressures deferred consumer spending.
Our focus on continuing to improve proving the customer experience continues to reflect on positive levels of customer satisfaction, achieving 7.9 out of 10 in our latest survey in November 2023. Our multi-year safety and wellbeing program continues to make good progress, with leading, lagging, and data indicators continuing to trend positively. Onto Slide 5. Australian Glass Group's revenue of AUD 43.2 million was up 13%, and EBIT before significant items up 79% to AUD 4.6 million. AGG delivered stable and resilient performance, with the high-performing double glazing market appearing to be holding. The business remains focused on optimizing volume and pricing. In the second half, we commissioned the second double glazing line in Victoria and a number of equipment upgrades in New South Wales, providing an uplift in quality and capacity.
This investment supports the business grow in line with the increasing adoption of double glazing. Customers are pleased with AGG's performance, and their reputation as a specialized high-performance double glazing processor continues to strengthen. AGG achieved an 8.1 out of 10 in their November 2023 customer survey. In February 2023, Metro Performance Glass announced the sale process for AGG, which continues to advance. The board is targeting an announcement in the near future. If a suitable deal can be concluded, the board will bring the offer to shareholders at an extraordinary meeting in the new year. I'll now hand over to Tony to discuss the financial results in more detail.
Thanks, Simon, and good morning to everyone. On slide six, we break our revenue down, and in New Zealand, you can see an overall decrease of 13% as new residential construction and renovations impacted by the softer market. The commercial segment remains steady. However, the business has a small number of legacy contracts at pre-price increase rates, which have impacted profit margins. As Simon has already mentioned, we are happy to see further growth in the AGG business. I would like to move on to the waterfall on slide seven. Movements in the New Zealand EBIT are shown in the gray shading. Our New Zealand EBIT before significant items result was NZD 1 million lower than prior year, with lower revenue partially offset by increased gross profit percentage, primarily driven by easing supply chain costs. Savings in distribution, glazing, admin were also benefits of the cost-out program.
Turning to the Australian performance, which is in the green shaded area of the waterfall, the encouraging story here is the continued revenue growth and gross profit margin improvements that have offset inflationary cost increases. Slide 8 gives our half year results for both the group and segmental breakdown. Of note is the NZD 11.3 million of significant items that drive the NZD 9.2 million loss for the period. The NZD 11.3 million is a combination of the NZD 9.1 million goodwill impairment and divestment and restructuring costs. Slide 9 details the decision to impair the carrying value of New Zealand goodwill by NZD 9.1 million at the half year, which represented approximately 21% reduction of the prior balance. This goodwill initially arose from acquisitions completed in 2012, two years before Metro Glass did its IPO.
The carrying value of Metro Performance Glass in tangible assets were reviewed as a result of the significant reduction in forecasted construction activity. This impairment of goodwill is an accounting charge only, with no impact on cash flow and/or banking covenants. Turning to the balance sheet on slide 10, net operating cash flows were above the prior year, primarily driven by reductions in working capital and a lower employer-employee cost as a result of cost out initiatives. In the first half of 2024, working capital commitments receded back to similar levels to the prior comparable period as the business reduced inventory, as supply chain reliability improved. Debtor and creditor profiles reduced also as a direct result of the softer trading conditions. Capital expenditure of NZD 2 million in the first half is focused on delivering increased capability and quality.
Net debt decreased by NZD 6.2 million year-on-year, to NZD 52.8 million as at 30 September 2023, and the key leverage ratio improved to 2.69 from 3.8. I'll now hand back to Simon to complete the,
Yeah. Thanks, Tony. Turning now to our outlook for FY 2024 on slide 11. In New Zealand, the 12-month rolling residential consents have declined, and while they are still above long-term trends, glass demand has fallen significantly. Demand for construction materials decreased across the sector and forecasts remain uncertain for FY 2024. It is the company's view that these conditions are likely to continue until inflation pressures and interest rates ease. While ensuring we deliver quality products safely and with excellent customer service, the company is resizing itself to ensure it is efficient for the changing market demand. With current market volatility, it is difficult to forecast New Zealand earnings for the balance of the year. However, it is anticipated that the New Zealand business will continue to be operating cash positive. In Australia, the number of detached dwelling commencements declined in all states.
However, the increasing use of double glazing in residential buildings is expected to partially offset the declines in residential construction activity. As previously announced in the sale process, for the 12 months to the thirty-first of March 2024, management forecasts are for AGG to achieve revenue, EBITDA and EBIT of approximately AUD 79 million, AUD 11.5 million and AUD 7.5 million, respectively. That brings us to the end of our presentation, and we're now happy to answer any questions that you may have. Thank you.
If you would like to ask any question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on your phone line will indicate when your line is open. Please state your name before posing your question. Once again, that is star one if you would like to ask a question, and we'll pause for just a moment. Once again, that is star one if you would like to ask a question. It appears there are no telephone questions. I'd like to turn the conference back over to our presenters for any additional or closing comments.
No, thank you. Okay, thanks, everyone. And yeah, if you have any questions and you want to contact us directly, happy to you know take your questions offline. Thank you.
Once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.