Guess which ASX 200 stock is tanking 7% after axing its dividend

Disappointed man with his head on his hand looking at a falling share price his a laptop.Disappointed man with his head on his hand looking at a falling share price his a laptop.

The share price of S&P/ASX 200 Index (ASX: XJO) stock Adbri Ltd (ASX: ABC) is plummeting today after the company posted its full-year earnings.

Stock in the cement and lime products manufacturer is currently down 7.07%, trading at $1.71.

ASX 200 stock Adbri crumbles as dividend dumped

Here are the key takeaways from the company’s earnings announcement:

  • $1.7 billion of revenue – up 8.4% on the prior comparable period (pcp)
  • $102.6 million of net profit after tax (NPAT) – down 12.1%
  • $157.2 million of earnings before interest and tax (EBIT) – down 10.1% on the pcp
  • $166.4 million of operating cash flow –  a 15% fall on that of the pcp
  • Net debt reached $576.4 million – a 32% increase
  • No final dividend declared

Adbri declined to pay a final dividend due to the capital required to complete its Kwinana Upgrade Project.

Its debt levels also increased last year, reflecting its Zanows acquisition and the upgrade project. Though, they were offset by $96.8 million of cash proceeds from the sale of property, plant, and equipment.

The company’s cash flow was dinted by lower earnings and higher working capital. Its capital expenditure came in at $255.1 million for the year – up 81.5% year-on-year.

What else happened last fiscal year?

Revenue at the company’s lime business was down just 4% on the prior year despite an 11% drop in volumes on the back of the wind-down in the historical Alcoa contract.

The business’ average selling price also lifted by 11.4% as numerous customers swapped from imported to domestic product.

Its concrete and aggregates business, meanwhile, saw revenue jump 12.5% amid solid demand and price increases.

What did management say?

Adbri CEO Mark Irwin commented on the release driving the ASX 200 stock lower today, saying:

Our full year profit result was impacted by higher operating costs caused by inflationary pressures and wet weather events.

Despite some significant operational headwinds during the year, the company made solid progress on a number of strategic initiatives, including our Kwinana Upgrade project, growth of our concrete and aggregates footprint through the Zanows acquisition, further recovery in our lime business, increased exposure to the infrastructure sector and divestment of some surplus land holdings.

What’s next?

Looking forward, the company expects cost headwinds to continue.

However, demand for its products is tipped to be bolstered by a backlog of residential works for much of 2023.

Such demand should rebuild resilience and margin.

Finally, the review of the Kwinana Upgrade Project is nearly complete. The company expects capital cost pressures to push its budget above the estimated $290 million. Though, it noted the review confirmed the project’s “robust economics”.

Adbri stock underperforms the ASX 200

Today’s tumble is just the latest experienced by the Adbri share price. The stock is currently 48% lower than it was this time last year. Though, it has lifted 7% so far this year.

For comparison, the ASX 200 has gained 5% over the last 12 months and 3% year to date.

The post Guess which ASX 200 stock is tanking 7% after axing its dividend appeared first on The Motley Fool Australia.

Should you invest $1,000 in Adelaide Brighton Limited right now?

Before you consider Adelaide Brighton Limited, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Adelaide Brighton Limited wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of February 1 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s