Category: Stock Market

Looking to bank the all-time high Ampol Ltd (ASX: ALD) dividend?

If you don’t own shares in the S&P/ASX 200 Index (ASX: XJO) energy stock already, then you’d better hurry!

Investors wanting to land that record dividend will need to own Ampol shares at market close this Thursday, 29 February. Ampol shares trade ex-dividend on Friday, 1 March.

If you own shares when the closing bell rings on Thursday, you can expect to see that passive income hit your bank account on 27 March.

Here’s what else you need to know.

Ampol dividend hits new all-time highs

Ampol reported its full-year results on Monday.

The highlight for passive income investors was the fully franked final dividend of $1.20 per share, which came coupled with a special dividend of 60 cents per share, also fully franked.

That works out to a fully franked final dividend of $1.80 per share. That’s up 16% from the final dividend of $1.55 per share paid out last year. And it represents the highest dividend ever paid by the ASX 200 energy stock.

At the current Ampol share price of $38.93, this equates to a fully franked pending yield of 4.6% from the final dividend alone.

Ampol also paid an interim dividend of 95 cents per share on 27 September. That sees the ASX 200 energy stock trading on a yield (partly trailing, partly pending) of 7.1%, with potential tax benefits from those franking credits.

In 2023 Ampol will have returned 89%, or $655 million, of its net profit after tax (NPAT) to shareholders.

Ampol CEO Matt Halliday said the company’s strong balance sheet enabled it to deliver “our highest ever dividends to shareholders”.

Ampol share price leaps to new record

Atop the record Ampol dividend declared on Monday, the Ampol share price hit a fresh all-time high today.

Ampol shares traded as high as $39.10 in earlier trade.

The current $38.93 per share (if maintained) will still mark a new record closing high.

The post Looking to bank the record Ampol dividend? Time is running out! appeared first on The Motley Fool Australia.

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More reading

• 25 ASX 200 shares with ex-dividend dates next week
• 1 ASX 200 dividend stock I’m buying for superior passive income in 2024
• How these 4 ASX 200 shares just gained major broker upgrades
• On the hunt for passive income? Here’s what you need to know about the record Ampol dividend
• ASX 200 energy stock Ampol charging higher on record 2023 sales

Motley Fool contributor Bernd Struben 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.

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If I think about the Warren Buffett method, the ASX share Lovisa Holdings Ltd (ASX: LOV) looks like an exciting business to own.

Warren Buffett is one of the world’s greatest investors, perhaps the best of all time. He recently credited Charlie Munger as being the architect of Berkshire Hathaway.

One of the main rules that helped the duo produce such strong returns is that they went for wonderful businesses purchased at fair prices.

Buffett really likes See’s Candies, a high-quality chocolate and sweets business within Berkshire Hathaway. It made strong profits for its size, but Berkshire Hathaway wasn’t able to re-invest for more growth to take it global. Instead, that profit was used to help grow other areas of Berkshire Hathaway.

With Lovisa, an affordable jewellery retailer, it’s very different – the ASX share has great growth potential.

Why Lovisa shares are so compelling

Firstly, let me note that the Lovisa share price is up 35% in the past month and 72% in the past three months. It would have been cheaper to buy a few weeks ago, and I’m not expecting strong gains in the short term after its impressive rally.

But the business continues to display lots of exciting elements.

In the FY24 first-half result, it reported revenue growth of 18.2% to $373 million, a gross profit margin of 80.7% (up 40 basis points) and a dividend that was 31% higher at 50 cents per share.

The business is investing heavily in store growth, which is growing its scale. Entering new markets could lead to a sizeable store network in a few years.

There are a number of markets where it has 10 stores or less, including Canada, Mexico, Italy, the Netherlands, Spain, China, Vietnam, Hong Kong and Taiwan. In Australia, it has 175 stores, while in a huge market like the US, it has 207 stores.

I think Lovisa has lots of potential to double its store count over the next seven or eight years. In the FY24 first-half period, it added 53 net new stores.

Despite the recent tricky trading conditions, the ASX share managed to deliver comparable store sales growth of 0.3% year over year in the first seven weeks of the second half of FY24 – total sales were up 19.6% in the same period compared to FY23.

New sales come at such a high margin, that it makes a lot of sense to open stores across numerous markets. I believe ongoing growth will help its underlying margins. If the company stopped opening (and spending on) new stores, I think its increasing operating leverage would be more apparent over the subsequent year or two.

The right call, in my mind, is to open as many (highly) profitable stores as it can worldwide, which it’s doing. Growing its digital sales could also be helpful if done at a good profit margin.

Foolish takeaway

The ASX share is certainly not cheap right now. But, the broker UBS thinks Lovisa could generate earnings per share (EPS) of $1.45 in FY28, which would put the current Lovisa share price at 21 times FY28’s estimated earnings.

Ongoing store growth makes me excited by this business, particularly if same-store sales can remain positive for the foreseeable future.

The post I’d use the Warren Buffett method and buy this ASX stock appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• I’d aim to turn a $20,000 savings account into $25,400 of passive income
• Here are the top 10 ASX 200 shares today
• Here’s how these 3 ASX 200 shares just earned substantial broker upgrades
• A once-in-a-decade chance to get rich from ASX 200 shares?

Motley Fool contributor Tristan Harrison has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway and Lovisa. The Motley Fool Australia has recommended Berkshire Hathaway and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and dropped into the red. In afternoon trade, the benchmark index is down 0.25% to 7,633.2 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Coles Group Ltd (ASX: COL)

The Coles share price is up 5.5% to $16.76. This follows the release of the supermarket giant’s half-year results. Coles reported a 3.7% increase in sales revenue to $22.2 billion and a 4.1% lift in underlying EBITDA to $1.9 billion. Management also revealed that the second half has started strongly with supermarket sales up 4.9% during the first eight weeks of the third quarter.

G8 Education Ltd (ASX: GEM)

The G8 Education share price is up almost 12% to $1.25. This morning, this childcare operator released its full year results and reported a 9.1% increase in revenue to $983.4 million and a 53.1% jump in statutory net profit after tax to $56.1 million. G8 Education’s second half performance was significantly stronger than the first, which bodes well for FY 2024.

Helia Group Ltd (ASX: HLI)

The Helia share price is up 11% to $4.82. This follows the release of the mortgage insurance company’s FY 2023 results. Helia reported statutory net profit after tax growth of 37% to $275.1 million and underlying net profit after tax growth of 7% to $247.7 million. This allowed the company to declare a fully franked final dividend of 15 cents per share and an unfranked special dividend of 30 cents per share.

Reece Ltd (ASX: RCE)

The Reece share price is up almost 16% to $27.87. Investors have been buying the plumbing parts company’s shares after it delivered a stronger than expected half-year result. Reece revealed a 2.5% lift in sales revenue to $4,537 million and a 6% increase in adjusted net profit after tax to $224 million. A fully franked interim dividend of 8 cents per share was declared.

The post Why Coles, G8 Education, Helia, and Reece shares are storming higher appeared first on The Motley Fool Australia.

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More reading

• Up 45% in a year, this ASX 200 insurance stock is going gangbusters on strong earnings
• Guess which ASX 300 stock is surging 14% amid mounting profits
• Everything you need to know about the new Coles dividend
• Coles share price jumps 6% on strong half-year sales growth
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro 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 positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is trailing the S&P/ASX 200 Index (ASX: XJO) today.

Shares in the mining giant are down 0.5% at the time of writing in afternoon trade on Tuesday, more than twice the 0.2% losses posted by the benchmark index at this same time. In earlier trade, BHP stock was down more than 1.2%.

And it’s not just the BHP share price dragging on the ASX 200 today.

The Fortescue Metals Group Ltd (ASX: FMG) share price is down 1.0% and Rio Tinto Ltd (ASX: RIO) shares are also down 1.0%.

So, what’s going on?

BHP share price hit by slumping iron ore outlook

BHP, alongside rivals Fortescue and Rio Tinto, are under pressure today following a 4% overnight drop in iron ore prices. The industrial metal is trading for just over US$115 per tonne, down from US$140 per tonne at the beginning of 2024.

Iron ore counts as the biggest revenue earner for all three ASX 200 miners.

BHP is listed on several international exchanges atop the ASX. And the iron ore price slide saw the BHP share price tumble by 1.9% on the NYSE overnight.

Much of the recent weakness in the iron ore price stems from falling expectations for a big uptick in demand from China, Australia’s top export market for the steel-making metal.

Many analysts had expected steel output in China to rebound following the nation’s Lunar New Year holiday period. But the data shows production remains subdued as China’s steel-hungry real estate sector continues to struggle.

Commenting on the market dynamics pressuring the BHP share price today, ANZ Group Holdings Ltd (ASX: ANZ) analysts said (quoted by Mining.com), “Inventories of iron ore at major Chinese ports rose. Supply concerns also eased, with a cyclone threatening WA ports now tracking away from the state’s iron ore hub.”

Also adding to easing supply concerns is Brazilian iron ore giant, Vale. The company reported that its production remains on track despite inclement weather, while it may also look to boost shipments to markets outside of China.

The post Why is the BHP share price trailing the ASX 200 on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Here’s the BHP dividend forecast through to 2026
• Top brokers name 3 ASX shares to buy next week
• Better buy: Fortescue or BHP shares?
• 3 ASX 100 and ASX 200 shares I’d buy now for a $1,820 passive income in 2024!
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor Bernd Struben 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.

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The S&P/ASX 200 Index (ASX: XJO) is out of form on Tuesday. In afternoon trade, the benchmark index is down 0.2% to 7,635 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down 26% to 36 cents. Investors have been selling the semiconductor company’s shares after it released its FY 2023 results. They appear disappointed that Brainchip continues to generate almost no revenue and burn through cash like kindling. Brainchip reported revenue of US$232,000 and a loss after tax of US$28.9 million.

DGL Group Ltd (ASX: DGL)

The DGL share price is down 42% to 60 cents. This follows the release of the industrial solutions company’s half-year results. DGL reported a 3% increase in revenue to $217 million but a 43% reduction in statutory net profit after tax to $5.9 million. Unreliable weather forecasts and supply chain disruptions impacted first-half results.

Weebit Nano Ltd (ASX: WBT)

The Weebit Nano share price is down 10% to $4.01. This has been driven by the release of the semiconductor company’s half-year results. The heavily shorted company reported a grand total of $153,000 in revenue for the six months with a loss of $25.2 million. Weebit Nano currently has a market capitalisation of $750 million.

Zip Co Ltd (ASX: ZIP)

The Zip share price is down 9.5% to 84.5 cents. This is despite the buy now pay later provider delivering a strong half-year result this morning. Zip reported a 28.9% increase in revenue to $430 million and group cash EBTDA of $30.8 million. The latter is up from negative $33.2 million a year earlier. It appears that investors were pricing in even stronger growth.

The post Why Brainchip, DGL, Weebit Nano, and Zip shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX All Ords stock just crashed 46% on half-year earnings
• Brainchip share price crashes 23% following another year of losses for ASX AI chipmaker
• 4 ASX tech shares tumbling on results releases
• Zip share price tumbles 9% despite explosive first-half growth
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. 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.

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The ASX All Ords is lower on Tuesday with the S&P/ASX All Ordinaries Index (ASX: XAO) down 0.55%.

Among the ASX All Ords stocks reporting earnings results today is chemicals business DGL Group Ltd (ASX: DGL), whose share price dived 45.6% to a new 52-week low of 56 cents this morning.

This followed news of a 43% nosedive in profit in 1H FY24.

The DGL share price is currently 60 cents, down 41.75%.

Let’s look at DGL’s report as well as the earnings performances of two other ASX All Ords stocks today.

ASX All Ords materials stock DGL plummets 46%

DGL reported revenue of $217 million in 1H FY24, in line with 1H FY23, along with a 3% increase in underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $30.4 million.

However, its statutory net profit after tax (NPAT) came in at $5.9 million, representing a 43% dive.

DGL Founder and CEO Simon Henry said unreliable weather forecasts and supply chain disruptions impacted first-half results.

Henry said:

We have taken corrective actions, and these disruptions are normalising, giving us confidence in the outlook.

DGL expects a stronger second-half performance, in line with typical annual seasonal trends.

The company said it has an intensified focus on managing costs and maximising efficiencies.

DGL is continuing to invest in growing its network and assets and improving its systems and warned this would lead to lower full-year net profit due to higher finance and depreciation costs.

However, the underlying FY24 EBITDA for the ASX All Ords stock “should be broadly in line with FY23”.

The company reported an underlying operating cash flow conversion of 93%. Its net assets are worth $339.2 million, up 2% since 30 June 2023, and its net debt was $117.2 million as of 31 December 2023.

No interim dividend for City Chic shareholders

The City Chic Collective Ltd (ASX: CCX) share price tumbled 12.5% to 49 cents after the ASX All Ords plus-size clothing retailer reported sales revenue of $105.8 million in 1H FY24, down 29% on 1H FY23.

City Chic also reported an underlying EBITDA loss of $7.5 million.

The company said it expects to return to profitable trading in 2H FY24.

Phil Ryan, CEO and Managing Director, said the company had been focusing on rightsizing its cost base,
optimising its inventory position, and introducing new products to drive demand.

He said:

I am pleased to report that the revitalisation of our product assortment is delivering improving margin and sellthrough rates, particularly in stores.

Our cost reduction measures will deliver approximately $25m in annualised savings and mitigation, exceeding our initial targets.

While cost of living pressures are impacting transaction volumes, the feedback and sell-through on our new ranges has been encouraging and our new product is expected to support our return to profitable trading.

The ASX All Ords company will not pay an interim dividend “in light of continued market uncertainty and the Group’s capital management priorities”.

Alumina reports on a “difficult year”

The Alumina Ltd (ASX: AWC) share price is down 7.6% to $1.01 after the company released its full-year FY23 results.

Alumina owns 40% of Alcoa World Alumina and Chemicals (AWAC), which form part of Alcoa Corp’s bauxite and alumina business segments.

Alumina reported a net loss after tax of US$150 million in FY23 compared to a US$104 million profit in FY22.

This follows AWAC reporting an EBITDA of US$165 million for FY23 compared to US$817 million in FY22.

AWAC’s alumina production fell to 10.3Mt, down from 11.8Mt in FY22. The realised alumina price for FY23 was US$352 per tonne, with the cash cost of production very close to it at US$308 per tonne.

Once again, Alumina shares will not pay a dividend to shareholders. The ASX All Ords materials share hasn’t paid a dividend since September 2022.

The company said 2023 was a “difficult year” due to lower production and higher costs.

However, progress on several fronts has been made in recent months, including confirmation of long-awaited mine plan approvals in Western Australia (WA).

AWAC has also chosen to fully curtail operations at the Kwinana refinery in WA and partially curtail operations at its San Ciprian refinery in Spain.

Alumina said:

Together with the ongoing focus on profitability improvement across all aspects of the portfolio, these initiatives provide AWAC with a strong foundation to create a significantly higher quality refinery portfolio.

As we reported yesterday, Alcoa has made a takeover bid for its minority joint venture partner. The Alumina board is currently recommending the proposal to shareholders.

The post Guess which ASX All Ords stock just crashed 46% on half-year earnings appeared first on The Motley Fool Australia.

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More reading

• Why Alumina, Kogan, Mayne Pharma, and Suncorp shares are racing higher
• Alumina shares leap 8% on Alcoa takeover bid
• Which ASX All Ords stock is diving 18% on FY23 results?
• 4 All Ords ASX dividend shares going gangbusters on results
• 3 ASX All Ords shares crashing as much as 24% on results

Motley Fool contributor Bronwyn Allen has positions in Alumina. 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.

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The S&P/ASX 300 Index (ASX: XKO) is down 0.3% during the Tuesday lunch hour, but we certainly can’t blame this ASX 300 stock for those losses.

Shares in the Aussie childcare centre operator are up a whopping 13.8% at the time of writing, trading for $1.275 apiece.

Any guesses?

If you said G8 Education Ltd (ASX: GEM), go to the head of the virtual class.

The ASX 300 stock is soaring today as investors mull over the company’s full-year 2023 results.

Read on for the highlights.

ASX 300 stock leaps on 2023 profit boost

• Revenue of $983 million, up 9.1% from 2022
• Statutory net profit after tax (NPAT) of $56 million, up 53.1% year on year
• Operating earnings before interest and tax (EBIT) up 25.2% from 2022 to $101 million
• Fully franked dividend of 3 cents per share, up from 2 cents per share in 2022

What else happened with G8 Education during the year?

The 53% increase in NPAT that looks to be sending the ASX 300 share rocketing today was attributed to G8’s earnings recovery. This was driven by improved centre performance, well-managed support office costs and lower net finance costs.

Occupancy levels slipped slightly from 2022 to 70.4% (down from 70.6%). But management noted this had stabilised in the second half of 2023, offering a positive start to 2024.

G8 Education also highlighted that 90% of its long day care centres are now rated as ‘exceeding’ or ‘meeting’ the National Quality Standard.

The 3 cents per share final dividend takes the company’s full-year passive income payout to 4.5 cents per share, up 50% from 2022. At the current share price that equates to a fully franked yield (partly trailing, partly pending) of 3.5%.

What did management say?

Commenting on the results sending the ASX 300 stock sharply higher today, G8 Education CEO Pejman Okhovat said:

Our team’s effort in 2023 saw G8 Education continue to improve its financial performance by focusing on improving experiences for its families and employees, while maintaining a disciplined approach to running our business, optimising our network, and carefully managing costs and our balance sheet.

At our Strategy Day in late 2023, we announced a program of network optimisation to improve group performance. I’m pleased to report we have completed eight of the targeted 31 divestments with another tranche of eight with in-principal agreements.

What’s next for the ASX 300 stock?

Looking at what could impact the ASX 300 stock in the year ahead, G8 reported that spot occupancy for the week ending 25 February was 66.3%, 1.7% higher than in 2023.

G8 increased fees by 4.5% in January to alleviate ongoing inflationary pressures. Management said the company’s capital allocation framework “supports strong cashflow”. 2024 capex is estimated to be $40 million to $45 million.

G8 Education share price snapshot

With today’s big boost factored in, the G8 Education share price is up 5% over the past 12 months, not including the dividend payouts.

The ASX 300 stock is up 37% from the recent 7 December lows.

Another ASX education stock leaping higher on results!

Although not an ASX 300 stock, Keypath Education International Inc (ASX: KED) is another ASX education stock that’s handsomely rewarding shareholders today.

The Keypath share price is up 17% at the time of writing, with shares trading for 55 cents apiece.
This follows on the company’s half-year results for the six months ending 31 December (1H FY 2024).

Keypath Education shares leap on revenue boost

• Revenue of US$66.9 million, up 14.0% from H1 FY 2023 (up 15.3% on a constant currency basis)
• Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$2.3 million, US$9.1 million higher than H1 FY 2023
• Net position of US$41.7 million, with no debt, as at 31 December
• Keypath FY 2024 revenue guidance in upper end of range of US$130 million to US$135 million

The post Guess which ASX 300 stock is surging 14% amid mounting profits appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares rocketing up to 20% on takeover news
• Tyro share price retreats 13% despite rocketing profits
• 2 ASX industrials shares crashing up to 22% on earnings
• Everything you need to know about the new Coles dividend
• Brainchip share price crashes 23% following another year of losses for ASX AI chipmaker

Motley Fool contributor Bernd Struben 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.

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There’s been plenty of M&A activity in recent months and this trend shows no signs of slowing.

This morning, two ASX shares revealed that they have received takeover offers.

Here’s what you need to know:

Prospa Group Ltd (ASX: PGL)

The Prospa share price has jumped 15% to 43 cents after the financial technology company accepted a takeover offer. Prospa has entered into a scheme implementation deed with a consortium led by the Salter Brothers Tech Fund.

Prospa’s Independent Board Committee (IBC) unanimously recommends that shareholders vote in favour of the 45 cents per share cash offer. That is in the absence of a superior proposal and subject to the independent expert’s report.

While a premium to recent levels, it is a long way from the ASX share’s 2019 IPO price of $3.78 per share.

In other news, this morning Prospa reported a 7.4% increase in half-year revenue to $145.4 million and a profit before tax of $9 million (from a $6.3 million loss).

QANTM Intellectual Property Ltd (ASX: QIP)

The QANTM share price is up 20% to $1.38. This morning, the intellectual property services company confirmed that it has received a non-binding indicative proposal from Rouse International.

Rouse is a UK-based international intellectual property firm operating in 12 jurisdictions, with a significant emphasis on the Asia Pacific region.

Following careful consideration of the unspecified offer, the QANTM Board has agreed to Rouse’s request to conduct due diligence with a view to putting forward a binding offer capable of being considered by shareholders.

Management warned that there is no certainty that a transaction capable of being considered by shareholders will eventuate.

The post 2 ASX shares rocketing up to 20% on takeover news appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

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The Tyro Payments Ltd (ASX: TYR) share price is tumbling today as the market makes sense of its FY24 half-year results.

Shares in the payments solutions provider are down a staggering 12.5% to $1.05 currently. The move marks a swift reversal from the $1.30 price that Tyro shares changed hands in the first moments of trading.

Tyro share price ignores first-half growth

Here are some of the key metrics for the six months ended 31 December 2023:

• Transaction value up 2.2% to $22.17 billion
• Merchant count grew by 2.8% to 68,780
• Revenue up 9.5% to $237.1 million
• Gross profit up 10.5% to $105.2 million
• EBITDA up 40.6% to $27.35 million
• Statutory net profit after tax (NPAT) up 367.2% to $5.14 million

What else happened in the first half?

Tyro’s latest report showed transaction value derived from its discretionary merchants — retail and hospitality — were soft in the first half.

Of the two, retail suffered the most, experiencing a 2.1% decline to $5.393 billion processed. Meanwhile, the hospitality vertical saw transaction value increase a meagre 1.8% to $9.455 billion.

The company’s non-discretionary segment delivered the source of growth. Tyro’s ‘services/other’ vertical clipped the ticket on $1.704 billion of card tapping, up 7.2% from the prior corresponding period. However, ‘health’ merchants stole the show, increasing payment value by 24.2% to $3.139 billion.

The company also noted its new merchant applications were offset by “elevated merchant churn of 16%” versus 11.7% in the previous first half. Interestingly, Tyro attributed this churn to the macroeconomic environment, aggressive competitive behaviour from one of its point of sale partners and the ‘Bring Your Own (BYO)’ offering.

Finally, legal matters between Tyro and Kounta (a point-of-sale provider) unfollowed throughout the period. On 16 November 2023, the courts ruled in favour of Tyro as Kounta was found to be in breach of its contractual obligations, sending the Tyro share price higher.

Shortly after, Kounta filed an appeal to the New South Wales courts. The two companies have since reached a settlement resulting in Tyro receiving $10 million in damages and Kounta being barred from offering competing products until 6 September 2024.

What did management say?

Tyro CEO and managing director Jon Davey highlighted the improving economics from broadened solutions, stating:

Our customers appreciate the simplicity of our integrated payments and cashflow offering. During the half, almost one in five new customers signed up for our payments and banking products, valuing the benefits that an integrated solution provides, and we expect this number to grow significantly over the calendar year.

Furthermore, Davey highlighted an accelerated development of new payments and banking features, which will be released to merchants from June.

What next for Tyro?

A glimpse into the next six months was shared through the company’s updated FY24 guidance. Based on the figures, management expects the second half to resemble the first. The company’s FY24 guidance is as follows:

• Transaction value between $43 billion to $44 billion
• Gross profit between $208 million to $215 million
• EBITDA between $54 million to $58 million
• Targeted EBITDA margin of approximately 26%

Pleasingly for shareholders, positive free cash flow is forecast to continue.

Tyro share price snapshot

In light of today’s decline, the Tyro share price is now 34% below where it was a year ago. For context, the broader S&P/ASX 200 Financials (ASX: XFJ) sector is up nearly 12% over the same span of time.

Factoring in its latest earnings, Tyro now trades on a price-to-earnings (P/E) ratio of roughly 56 times.

The post Tyro share price retreats 13% despite rocketing profits appeared first on The Motley Fool Australia.

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

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The Australian share market is out of form on Tuesday with the All Ordinaries index currently down approximately 0.3%.

While that’s disappointing, it is nothing compared to the declines being recorded by the two ASX industrials shares listed below.

Here’s why they are being sold off today:

Ashley Services Group Ltd (ASX: ASH)

The Ashley Services share price is down 22% to 27 cents. This morning, the integrated provider of training, recruitment and labour hire released its half-year results and reported a 10.8% increase in revenue to $290.8 million but an 83% decline in net profit after tax to $1 million. The company’s profits were hit by impairments relating to the Linc business.

The ASX industrials share’s managing director, Ross Shrimpton, was disappointed with the half. He said:

The first half result has been challenging. The outcome of the Linc acquisition is disappointing. As with all acquisitions, there was risk associated with the purchase of Linc. We had 18 months to renew the major customer contract or secure new customers and expand within the higher margin Oil and Gas sector. As of today, the business is ongoing, but with minor contracts in hand. Earnings from Linc in FY24 will be negligible.

The value of acquired customer relationships (originally $2.5 million) have been written off in full throughout FY23 and H1 FY24. Goodwill has also been impaired, with its value reduced to $0.35 million during H1 of FY24.

Silk Logistics Holdings Ltd (ASX: SLH)

The Silk Logistics share price is down 13% to $1.55. This follows the release of the logistics provider’s half year results. Silk reported a 9% increase in revenue to $276.5 million but a 22.4% decline in underlying net profit after tax to $7.6 million. Management blamed the profit decline on additional right-of-use (property lease) depreciation expense.

Looking ahead, the company expects revenue of $540 million to $560 million and underlying EBIT of $34 million to $37 million. Though, management warned that trading conditions are tough. It said:

Trading conditions are expected to remain challenging for the remainder of FY24. Silk will focus on preserving profitability through increased operational efficiencies, driving organic growth and integration of acquired businesses to realise synergy benefits. Silk maintains a positive outlook with respect to its business development pipeline and its customer value proposition to win further new business.

The post 2 ASX industrials shares crashing up to 22% on earnings appeared first on The Motley Fool Australia.

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More reading

• Tyro share price retreats 13% despite rocketing profits
• Everything you need to know about the new Coles dividend
• Brainchip share price crashes 23% following another year of losses for ASX AI chipmaker
• 4 ASX tech shares tumbling on results releases
• Guess which ASX 200 stock is nosediving 20% on half-year results

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

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