Category: Stock Market

There has been a rough reaction to some All Ordinaries (ASX: XAO), or All Ords, ASX share results. One stock has dropped around 20%!

ASX reporting season is like Christmas. It’s exciting unwrap the company report, but sometimes you really didn’t want what’s inside.

Investor reaction to a result can be just as much about expectations about the numbers than the numbers themselves. For example, if the market is expecting a company to report a 10% profit rise and it only reports a 5% rise then that’s seen as disappointing.

Let’s briefly look at these three stocks.

Humm Group Ltd (ASX: HUM)

The Humm Group share price is currently down 24%.

In the ASX All Ords share’s FY24 first half result, the financial services and instalment plan company reported that its total receivables rose by 23% to $4.65 billion, with commercial receivables up 39% to $2.7 billion. The ‘normalised cash profit after tax‘ fell 27% to $28.1 million. Higher interest rates meant a bigger interest cost to the business. The commercial finance segment saw normalised cash profit increase 12% to $21.6 million.

The company was pleased to report it had executed another $7.5 million of further cost savings during the FY24 first half, bringing the total savings to $26.1 million since the cost-saving program started in HY23.

Humm reported a statutory net loss after tax of $6 million, compared to a net profit after tax of $7.5 million in HY23.

The business declared a fully franked interim dividend of 0.75 cents per share.

Sims Ltd (ASX: SGM)

The Sims share price is currently down by 9%.

In the FY24 first half result, the metal recycling business reported that revenue rose 7.4% to $4.1 billion. Statutory earnings before interest and tax (EBIT) rose 0.2% to $163.8 million, but underlying EBIT sank 85.6% to $13.4 million. Statutory NPAT dropped 34.9% to $65.8 million.

The ASX All Ords share blamed the profit decline on lower metal trading margins and inflationary pressures, which was partly offset by “cost control measures”. It disclosed that challenging market conditions were felt across all of its metal segments, though there was a varying performance between and within geographic regions.

In terms of the outlook, Sims is confident about the medium-term and long-term. Metal-intensive infrastructure spending continues to drive longer-term demand for scrap metal.

In the short-term, the underlying EBIT is expected to improve in the second half of FY24 compared to the first half, including $25 million of cost reduction initiatives.

Sims said initiatives have been started to increase both domestic sales channels and unprocessed material in the USA. Demand for scrap metal in the USA is “expected to remain robust, supporting prices.”

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is down 13%.

It reported in the FY24 first-half result that total sales dropped 2.5% to $248.5 million. The gross profit margin was flat, while the underlying cost of doing business (CODB) increased to 32.9% (up from 32.4%). New store running costs and higher wage costs led to the CODB worsening.

Statutory net profit after tax was flat at $2.7 million, the underlying net profit dropped 31% to $3.5 million. The interim dividend per share was cut by 33% to 1.8 cents.

Baby Bunting pointed to challenging economic conditions, though it saw an improvement in winning new customers, and it was disciplined with its inventory management. The ASX All Ords share said cost control delivered a “significant” year-over-year improvement with operating cash flow.

In terms of the trading update, between Boxing Day to 16 February 2024, total sales were down 1.4%, and online sales increased 14%. The rate of new customer acquisition was up 3.4%.

It said living pressures are still affecting customers and this is “unlikely to abate in the short-term with economising likely to continue.”

The post 3 ASX All Ords shares crashing as much as 24% on results appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 recommended Humm 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 ASX All Ords is slightly in the red in early trading on Wednesday as earnings season continues.

The S&P/ASX All Ordinaries Index (ASX: XAO) is currently down 0.04% to 7,910.1 points.

But let’s take a look at some results from three companies whose share prices are doing much better.

Bravura Solutions Ltd (ASX: BVS)

The Bravura Solutions share price rocketed 46% earlier to a new 52-week high of $1.40 on Tuesday. The ASX All Ords financial services management software provider has reported its 1H FY24 results. The company reported a return to profitability with a positive cash EBITDA of $300,000. EBITDA was $7.9 million, up $11.5 million on 1H FY23. Gross revenue came in at $127 million, up 7.4% on 1H FY23.

The ASX All Ord stock is currently trading for $1.23 per share, up 27.6%.

McMillan Shakespeare Ltd (ASX: MMS)

The 1H FY24 results of McMillan Shakespeare also has the market excited today. The ASX All Ords stock rose 15.2% to $20.10 in early trading after the employee benefits provider reported a 42.9% bump to normalised EBITDA at $86.9 million. The company declared an interim fully franked dividend of 76 cents per share, up 31% on last year’s interim payment.

The ASX All Ord stock is currently trading for $20.06 per share, up 14.93%.

Perenti Ltd (ASX: PRN)

Record first-half results have this ASX All Ords mining services company surging on Tuesday. The Perenti share price hit a high of 94 cents this morning, up 10.6% after the company released its numbers. Perenti announced a record revenue of $1.6 billion and a record underlying EBITDA of $312.4 million. Statutory NPAT(A) in 1H FY24 was $69.8 million, up from $44 million in 1H FY23. Perenti said this was due in part to a gain on the “transformative, value accretive” DDH1 acquisition.

The ASX All Ord stock is currently trading for 93 cents per share, up 8.82%.

The post ASX All Ords stocks surging 10% to 46% on earnings results appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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 Bravura Solutions. The Motley Fool Australia has recommended McMillan Shakespeare. 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 you want to receive the next Insurance Australia Group Ltd (ASX: IAG) dividend, then you will have to act fast.

That’s because the insurance giant’s shares are going ex-dividend on Wednesday.

When a share trades ex-dividend, it means the rights to an upcoming payout are settled.

So, this means you have until the close of play today to buy IAG shares if you want to receive its 10 cents per share partially franked interim dividend.

Should you buy IAG shares?

Opinion remains divided on whether the insurance company’s shares are good value at present.

Goldman Sachs currently has a neutral rating and $6.00 price target on its shares. This implies approximately 3.4% downside from current levels. The broker prefers rival Suncorp Group Ltd (ASX: SUN).

It’s a similar story at Morgans, with its analysts putting a hold rating and $6.17 price target on the company’s shares on Monday.

But there are a couple of bulls out there. The team at Macquarie has an outperform rating and $6.40 price target on its shares. This implies modest upside from current levels.

Citi, on the other hand, sees meaningful upside for investors. It has a buy rating and $6.75 price target on IAG shares.

If Citi’s analysts are on the money with their recommendation, it would mean a gain of 8.5% for investors over the next 12 months.

In addition, the broker expects a dividend yield of 4.2% for the year, which stretches the total potential return to almost 13%.

The post IAG shares go ex-dividend tomorrow: Should you buy now? appeared first on The Motley Fool Australia.

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• Why Inghams, IAG, Neuren Pharmaceuticals, and Pro Medicus shares are sinking today
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie 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 Megaport Ltd (ASX: MP1) share price is losing ground today.

Shares in the S&P/ASX 200 Index (ASX: XJO) tech stock closed yesterday trading for $13.80. In morning trade on Tuesday, shares are changing hands for $13.31 apiece. That’s down 3.6% following the release of the company’s half-year results (1H FY 2024).

For some context, the ASX 200 is down 0.1% at this same time.

Longer-term shareholders won’t be overly concerned with the retrace though. Shares in the network as a Service (NaaS) solutions provider are still up an impressive 119% over 12 months.

Here’s what ASX 200 investors are considering today.

Megaport share price slides despite profit surge

• Half-year revenue of $95 million, up 35% from 1H FY 2023
• Record annual recurring revenue (ARR) of $192 million up 29% from the prior year
• Gross profit of $67 million up 43% from 1H FY 2023
• Record earnings before interest, taxes, depreciation and amortisation (EBITDA) of $30 million, up 785% from 1H FY 2023

What else happened during the half for Megaport?

With some lofty market expectations, the Megaport share price is in the red today despite strong financial metrics across the board.

The company credited the huge boost in half-year EBITDA to its 35% top-line revenue growth and management’s tight focus on cost control.

The boost in operating and financial performance drove EBITDA margins up to 32% over the six-month period, up from 5% in 1H FY 2023.

Net profit came in at just over $4 million, up from a sizeable loss in the prior corresponding half-year.

As at 31 December, Megaport had net cash of $46 million, up from $40 million a year earlier.

What did management say?

Commenting on the half-year operations which have seen the Megaport share price among the top performers on the ASX 200, CEO Michael Reid said the company’s earnings surge was “an amazing result and indicative of the outstanding financial turnaround.”.

Reid added:

$12.5 million in net cash flow represents a massive $40.8 million improvement from the $28.3 million net cash outflow we reported for the half year at this time last year. A phenomenal result that has enabled us to make investments in the go-to-market engine while maintaining our robust financial position.

What’s next for the ASX 200 tech share?

Looking at what could impact the Megaport share price in the months ahead, Reid said, “A strong financial foundation has been laid, and I look forward to doubling down on our efforts in the second half as we continue to deliver profitable, efficient growth.”

ASX 200 investors may be taking some profits today, however, with Megaport’s guidance unchanged despite the company’s very strong first-half results.

According to Reid:

With our finances in great shape and a go-to-market engine poised to fire, we’re happy to report that FY24 revenue and EBITDA guidance is being restated at $190 to $195 million and $51 to $57 million, respectively.

And our net cash flow remains strong after already lowering our capex guidance to $20 to $22 million in January 2024.

Megaport share price snapshot

Even with today’s intraday retrace factored in, 2024 has started out with a bang for the ASX 200 tech share.

Since the opening bell on 2 January, the Megaport share price is up more than 44%.

The post Up 119% in a year, Megaport share price slipping today despite record earnings appeared first on The Motley Fool Australia.

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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 positions in and has recommended Megaport. The Motley Fool Australia has recommended Megaport. 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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ARB Corporation Ltd (ASX: ARB) shares are having a stunning session.

In morning trade, the ASX 200 stock has jumped 13% to a 52-week high of $40.43.

This follows the release of the 4×4 automotive parts company’s half-year results.

ASX 200 stock jumps on results

• Sales revenue up 0.1% to $341.5 million
• Profit after tax up 8.1% to $51.3 million
• Interim dividend up 6.3% to 34 cents per share

What happened during the half?

For the six months ended 31 December, ARB reported a modest 0.2% lift in sales revenue to $342.7 million.

The ASX 200 stock’s sales would have been stronger, but its Aftermarket sales were significantly hindered during the second quarter by industrial disputes across Australian ports. This resulted in extensive inbound and outbound disruptions. Australian Aftermarket were up 3.7% over the prior corresponding period.

Management advised that it continues to implement initiatives to improve its fitting capacity and alleviate constraints.

ARB’s Export sales fell by 13.6% during the period after strong sales growth in the UK was offset by challenging market dynamics in other key international markets.

Finally, sales to original equipment manufacturers (OEM) increased by 53.8% over the period. This is attributable to increased volume from existing contracts, new vehicle model launches, and vehicle availability.

The ASX 200 stock’s profits grew quicker than its sales thanks to margin improvements. ARB reported an 8.1% increase in profit after tax to $51.3 million. This allowed the company’s board to increase its dividend by 6.3% to 34 cents per share.

Outlook

The good news is that the second half has started very positively. Management revealed that sales in the month of January were strong with the resolution of Australian port disruptions and management initiatives contributing positively to accessory fitting capacity.

In addition, it advised that it maintains a positive outlook despite continued uncertain economic conditions, particularly in the global environment. It concludes:

The company has a strong customer order book, strengthening partnerships and opportunities with OEMs and new and innovative products to be released to market during 2024. The Company’s distribution network continues to expand to meet higher customer demand as the supply of new vehicles around the world increases. The Board believes ARB is well positioned to achieve on-going long-term success in Australia and internationally, with strong brands around the world, loyal customers, very capable senior management and staff, a strong balance sheet and growth strategies in place.

The post Guess which ASX 200 stock is surging 13% after solid half-year result appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today

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 ARB Corporation. The Motley Fool Australia has recommended ARB Corporation. 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 window of opportunity to snag the latest Wesfarmers Ltd (ASX: WES) dividend is shut.

After declaring its latest interim dividend on Thursday last week, the final day of eligibility for the retail conglomerate’s payment was yesterday. Now trading ex-dividend, any purchasing settlements of Wesfarmers shares occurring today will miss out.

Shares in the $71 billion behemoth are 1.5% lower at $63.00 apiece this morning.

Here’s what new investors are missing out on

The owner of Kmart, Bunnings, and Officeworks delivered a solid half-year result last week despite tough conditions for retailers amid exceptionally high interest rates.

Many other ASX-listed retail shares have unveiled declining profits during this reporting season. However, Wesfarmers dished out a respectable 3% increase in net profits after tax (NPAT) to $1.43 billion.

Buoyed by stronger earnings, Wesfarmers has boosted its fully franked interim dividend by 3.4% to 91 cents per share. The payment to shareholders will mark the largest interim dividend since April 2019, when the company maintained some ownership in Coles Group Ltd (ASX: COL).

If we look at the dividends over the past 12 months, shareholders have accrued $1.94 of income per share. This translates to a dividend yield of 3.08% based on the Wesfarmers share price at the time of writing.

Simply put, a $10,000 holding in Wesfarmers would have amounted to $308 worth of passive income from these two payouts. After franking, or what’s referred to as ‘gross dividends’, the figure improves to approximately $440.

Those eligible to receive Wesfarmers’ interim dividend will see it appear on 27 March 2024.

Could Wesfarmers shares still be a buy for income?

The window is shut on Wesfarmers’ interim dividend, but is it too late to buy for future passive tendies?

Analysts at investment bank Jefferies would suggest possibly not. Impressed by the result amid challenging cost inflation, the analysts bumped their Wesfarmers share price target from $57.00 to $60.00.

Furthermore, full-year earnings are expected to hit $2.53 billion in FY24 and $2.76 billion in FY25. For reference, the company raked in $2.465 billion in profits in FY23.

If this were to occur, shareholders could see dividends continue to grow over the coming years.

The post Wesfarmers shares walk back from 52-week highs without dividend 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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group and Wesfarmers. 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 Star Entertainment Group Ltd (ASX: SGR) share price crashed 26% in the first 30 minutes of trade on Wednesday after coming out of a trading halt.

Star Entertainment shares opened at 45.5 cents, down 18.75% on Friday’s closing value of 56 cents.

The casino operator’s stock then quickly fell to an intraday trough of 41.5 cents.

This is a new 52-week low and represents a 25.9% dive on yesterday’s close.

The Star Entertainment share price is currently at 43.5 cents.

Let’s recap what’s happening.

Why is the Star Entertainment share price tanking?

As we reported, Star Entertainment shares went into a trading halt yesterday at the company’s request.

The casino operator advised the ASX that it had received news from the NSW Independent Casino Commission (NICC) that a second inquiry into its suitability as a casino operator will be held.

The inquiry commenced yesterday and will run for approximately 15 weeks. A final report is due 31 May.

After the market close yesterday, The Star issued a statement saying:

The NICC has informed The Star that the purpose of the Inquiry is to assist the NICC in forming a view as to what, if any, action the NICC should take in respect of The Star Sydney Pty Ltd (The Star Sydney) prior to the end of the manager’s appointment on 30 June 2024.

Star’s statement included the inquiry’s full terms of reference but no further comment from the company.

The NICC announced yesterday that Adam Bell SC, who conducted the first inquiry, would run the second one. The first inquiry found The Star unsuitable to hold a casino licence in 2022.

In October 2022, Star Entertainment’s gaming licence in NSW was suspended and it was fined $100 million.

The NICC appointed Nicholas Weeks as independent manager to determine if The Star could address and remediate the findings of the first inquiry and achieve suitability status again.

The NICC has extended Weeks’ term twice and clearly doesn’t think The Star is moving fast enough.

NICC chief commissioner, Philip Crawford, commented:

There was a substantial shift required and The Star has had 18 months to demonstrate that it has the capability and resources to regain its casino licence.

The NICC has had concerns about the extent that remediation is attributable to the manager’s oversight and direction versus what is being driven by The Star’s reform agenda.

Bell Two will bring us back to the Bell Report and The Star’s efforts to regain its casino licence in the shadow of that report.

Crawford warned The Star:

There is much at stake for The Star, so the NICC is giving the casino every chance it can to demonstrate whether it has the capacity and competence to achieve suitability.

This includes meeting its financial obligations under the casino licence and funding its remediation program sufficiently.

The inquiry will provide the NICC with the information needed to make an important decision for The Star, its employees, its stakeholders and the wider community.

The post Star Entertainment share price crashes 26% upon return to trade appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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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BHP Group Ltd (ASX: BHP) shares are trading lower in morning trade.

At the time of writing, the mining giant’s shares are down 1% to $45.58.

Why are BHP shares falling?

Investors have been hitting the sell button today after the Big Australian’s half-year results fell a touch short of expectations.

In case you missed it, the mining giant reported a 6% increase in revenue to US$27.2 billion but a sizeable 86% decline in profit after tax to US$927 million. The latter was driven by US$5.6 billion of exceptional items relating to the impairment of Western Australia Nickel and charges the Samarco dam failure.

Excluding these exceptional items, the miner’s underlying profit was flat on the prior corresponding period at US$6.6 billion. This equates to 129.6 US cents on a per share basis.

Despite its flat underlying earnings, the BHP board was forced to cut its fully franked interim dividend by 20% to 72 US cents per share. This equates to $1.10 in local currency.

Expectations missed

Goldman Sachs was expecting revenue of US$27.6 billion for the first half. This means that the company was approximately 1.5% short on the top line.

It was much worser for earnings per share, with the market pencilling in half-year earnings of US$1.43 per share. This means a miss of 9.4% on that metric.

One small positive is that its dividend payout ratio of 56% came in ahead of what analysts at Morgans were expecting. Prior to the result, the broker said:

Moderating dividend. We expect a lower dividend payout ratio of 55% in the first half, which would be the lowest level of earnings paid out since 2018. We base this assumption on rising investment (capex +60% yoy) and net debt (US$12.5 – $13.0bn vs target range of US$5 – $15bn).

Overall, not the strongest result from BHP and it isn’t overly surprising to see its shares fall today.

The post BHP shares fall after disappointing first-half earnings miss appeared first on The Motley Fool Australia.

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More reading

• BHP share price on watch amid 86% profit decline and dividend cut
• 5 things to watch on the ASX 200 on Tuesday
• What are the pros and cons of buying BHP shares before the company reports?
• I’d need this many BHP shares for passive income of $10,000 a year
• Why these 3 top ASX 200 stocks grabbed the Motley Fool’s headlines this week

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 Goldman Sachs Group. 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 you follow global stock markets, you’ve likely had one eye on the S&P 500 Index (INDEXSP: .INX).

The index of the 500 largest US stocks had been on an absolute tear over the past 16 months.

As we saw with ASX shares, the S&P 500 began its recovery from a lengthy slide in mid-October 2022.

Since 14 October 2022, the US benchmark index has gained a whopping 40%.

Now ASX shares have done well over that period too. The S&P/ASX 200 Index (ASX: XJO) is up 15% since 21 October 2022 when the Aussie benchmark began its own recovery.

But, even taking into account the tax credits some ASX shares offer via franked dividends, the US market has clearly been a rewarding place for Aussies to invest some of their savings.

Over the past 12 months, for example, the S&P 500 has gained 25% compared to the 4% gain posted by the ASX 200.

And the analysts at Yardeni Research are forecasting that the benchmark US index could surge another 30% from current levels by the end of 2026.

Why the S&P 500 could keep charging higher

According to Yardeni Research (courtesy of The Australian Financial Review), the S&P 500 should hit 6,500 points in 2026. The index currently sits at 5,005 points.

That forecast is based on the analysts’ earnings per share (eps) estimates, which look to be proving highly accurate for 2023.

“We are sticking with our S&P 500 earnings-per-share estimates of $US225 for 2023, $US250 for 2024, and $US270 for 2025. For 2026, we are now estimating $US300,” Yardeni said.

The market research firm added:

Our US$225 earnings forecast for 2023 didn’t change for over a year before 2023 arrived. At the end of 2022, it was among the most bullish projections out there. That’s because we didn’t expect a recession, as many other strategists and economists had projected.

They therefore predicted that 2023 earnings would fall between US$180 and US$200 per share. Looks like our 2023 forecast for earnings could be a near bullseye.

One ASX share to buy today for the forecast 30% surge

With 500 companies making up the S&P 500, the easiest way to tap into the forecast gains is via an exchange-traded fund (ETF).

For Aussie investors who prefer to stick to the ASX, I recommend having a look into the iShares S&P 500 ETF (ASX: IVV). The ETF aims to track the S&P 500. And it comes with low 0.03% annual fees.

As at 31 December, the ASX share was up 26% over 12 months and up 107% over five years.

The ETF currently holds 509 US-listed stocks, offering you broader diversity with a single ASX share investment.

The top three holdings of the ETF are Apple Inc (NASDAQ: AAPL), Nvidia Corporation (NASDAQ: NVDA) and Microsoft Corp (NASDAQ: MSFT).

The post One ASX share to buy today to ride the 30% forecast surge in the S&P 500 appeared first on The Motley Fool Australia.

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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 positions in and has recommended Apple, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Nvidia, and iShares S&P 500 ETF. 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 Sonic Healthcare Ltd (ASX: SHL) share price is on the slide on Tuesday morning.

At the time of writing, the healthcare company’s shares are down almost 6% to $29.92.

This follows the release of the company’s half-year results.

Sonic share price falls on half-year results

• Revenue up 5% to $4,306 million
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 20% to $737 million
• Net profit after tax down 47% to $202 million
• Interim dividend up 2.4% to 43 cents per share

What happened during the half?

For the six months ended 31 December, Sonic reported a 5% lift in revenue to $4,306 million. This reflects a 15% increase in base business revenue to $4,267 million, which was partially offset by a 90% decline in COVID revenue to $39 million.

While Sonic’s EBITDA fell 20% over the prior corresponding period, this was in line with its guidance.

And despite the company’s net profit falling 47% to $202 million, this didn’t stop the Sonic board from increasing its interim dividend by 2.4% to 43 cents per share.

Management commentary

Sonic’s CEO, Dr Colin Goldschmidt, appeared pleased with the way the company’s transition was going. He said:

As previously flagged, the 2024 financial year is one of transition for Sonic Healthcare, as the impacts on our business of the COVID pandemic dissipate, and we return to normal business. Whilst our headline numbers for the half-year show significantly lower earnings versus the comparative period, this is the result of having 90% less COVID-related revenue in the current period.

Our base business revenue grew organically by 6.2% on a like-for-like basis versus H1 FY 2023 and 14.3% versus H1 FY 2020 (pre-pandemic). Organic base business growth was particularly strong in our Australian (9%), German (8%), and UK (13%) laboratory businesses. The USA and Swiss operations both achieved base business organic growth of 4%, with Swiss growth impacted by a fee cut in the prior year.

Outlook

Management advised that it is on track to achieve its full-year EBITDA guidance range of $1.7 billion to $1.8 billion. However, it acknowledges that it is now more likely to be towards the lower end of this guidance range.

Dr Goldschmidt concludes:

Sonic’s management teams around the world are acutely focused on base business organic growth and margin improvement. Major initiatives are underway to grow earnings, including large scale costout programs. We expect earnings in the second half to be substantially higher than in the first, as the contribution of these initiatives ramps up and the benefits of recent acquisitions accrue.

The Sonic share price is down 9% over the last 12 months.

The post Sonic share price sinks after first-half profit crash 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 recommended Sonic Healthcare. 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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