Despite the sales boost, shares in the dental manufacturer dropped as low as 16% before rebounding in early afternoon trade
At the time of writing, the SDI share price is down 10.19% at 92.5 cents apiece.
Resumption in dental work a key driver of sales
Today’s trading update announced a 26% increase in unaudited global sales for the six months ending 31 December 2021 to $46.2 million.
That compares to $36.8 million in sales for the same period last year and represents a record first-half performance for the company.
SDI believes the resumption of normal trading conditions last year were a key driver of the sales increase, with the exception of the New South Wales and Victorian markets due to their extended COVID-19 lockdowns.
But the company reported it has been affected by higher logistics costs in the first six months of FY22 due to the disruption in global freight activities. SDI says this has impacted gross product margins by 7%.
Despite strong sales in its Australian direct exports and in Brazil, up 65% and 66% respectively, these are lower margin regions for the company.
Overall, total gross product margins for the first half of FY22 fell by 12% to 53%, compared to 65% for the prior corresponding period.
It seems investors reacted negatively to news of an expected fall in net profit. SDI reported its net profit (after tax) for the period will be between $2.5 to $3 million, compared to $4.6 million for the same time the year prior.
The company’s half-year results will be released on 17 February.
SDI is a Victorian-based manufacturer of specialised dental equipment sold in more than 100 countries.
SDI share price snapshot
Over the last 12 months, the SDI share price has increased by 26% although it has dropped almost 10% in the past month.
The post Why the SDI (ASX:SDI) share price is falling 10% today appeared first on The Motley Fool Australia.
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