Category: Stock Market

The Buddy Technologies Ltd (ASX: BUD) share price more than doubled over the past week as sales of its new smart lights gain traction in Europe and the US.

Shares in the IoT solutions group jumped a further 7.7% today to 2.8 cents and is up 180% from a week ago.

Management provided a number of updates during the period, including the launch of sales of its low-cost smart light LIFX White on Amazon.com, Inc. (NASDAQ: AMZN) and Best Buy Co Inc (NYSE: BBY).

Improving earnings loss

The company also reported strong June sales results as shops in the US started to reopen from the COVID-19 shutdown, including  Best Buy’s more than 1,000 stores across the country.

“Consolidated revenue for Buddy was A$2.5 million – up 39% from May (A$1.8 million) and up 4%from June 2019 (A$2.2 million), underscoring that demand for the Company’s products remains strong even while the pandemic continues to be prominent in several territories,” said Buddy’s chief executive David McLauchlan.

However, $600,000 of the total came from government subsidies relating to the COVID-19 pandemic. Its earnings before interest, tax, depreciation and amortisation (EBITDA) was also still stuck in a loss of $266,000.

Best quarter yet

But management was quick to point out that the June quarter’s negative EBITDA is still its best one yet despite the period traditionally being a “slow period” for sales.

“Both topline revenue and EBITDA were down on internal management forecasts due to the slightly delayed shipment of the first order of the Company’s new LIFX White product,” added Mr McLauchlan.

“This product, which was expected to partially ship by 30 June, instead did so in the first week of July.”

Does Buddy have enough cash?

Total cash on hand fell 11% on the prior month to $2.5 million at the end of June. Buddy managed to restructure its US$6 million inventory finance loan into a purchase order financing facility.

This will enable the company to use the facility to fund the $3.8 million initial order of LIFX White smart lights.

“The Company can report no change to its other working capital facility, provided by ScottishPacific,” said Mr McLauchlan.

“This remains a A$20 million facility, where advances are made against trade receivables, and will continue to be used as the Company’s trade receivables permit.”

European rollout

Buddy also announced that it’s rolling out its new point of sale (“POS”) LIFX units in Europe with 15 locations currently on sale at Germany’s do-it-yourself (“DIY”) retailer, Bauhaus.

It claimed that its LIFX smart lights have displaced major lighting rival Osram in the process and the new POS units will gradually roll out to retail partners in France, Russia, Norway, Sweden, Denmark and Finland.

More reading

• Top brokers name 3 ASX shares to sell today
• 3 top ASX dividend shares for income investors in August
• Why you should treat your superannuation like a child
• 3 underloved ASX healthcare shares with strong comeback potential
• Atomos share price surges 5% despite 17% revenue slump

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Atomos Ltd (ASX: AMS) share price has jumped 5.62% higher today despite announcing a 17.6% drop in unaudited FY20 revenue.

Why has the Atomos share price surged?

Atomos is a global video technology company that creates products for the social, pro-video and entertainment markets.

In today’s business update, Atomos reported unaudited FY20 revenue of $44.5 million, down from FY19 revenue of $54.0 million. The coronavirus pandemic was understandably cited as a big factor behind the full-year revenue slump.

The pandemic has slowed earnings growth after a bumper 1H20 result saw the company deliver $32.6 million of half-year revenue. In contrast, 2H20 revenue was $11.9 million, largely thanks to the impact of COVID-19.

However, the update cites that the video market in July is “starting to open” and show positive signs, with July revenue up ~50% on 2H20 run rate.

Atomos’ current cost base has been reduced by approximately 60% to ~$1.0 million per month, fully implemented from April 2020.

On the balance sheet side, Atomos reported that it is “well-funded”. That includes having $19 million of cash on hand as at 30 June, with access to a $5 million debt facility.

It’s been a tough start to the year for the Atomos share price, which has fallen 66.4% lower in 2020.

What’s happening on the operations side?

Atomos started shipping the AtomX SYNC module during the quarter ended June 2020, which brings “wireless timecode, sync and control technology to the Ninja V”.

For those unaware, the Ninja V is a 5″ on-camera monitor/recorder that records and plays back DCI 4K, UHD 4K, and HD video from purpose-built mini-SSDs.

Beyond quarter-end, Atomos yesterday announced that the new Sony Alpha 7S III will be able to record the Apple ProRes Raw format via the Ninja V.

Market outlook

There were no specific figures provided in today’s market update.

However, Atomos did cite “some initial positive signs” of market recovery from COVID-19 and “cause for optimism”.

That includes the strong July revenue figures, which are up 50% on 2H20 run-rate. The company did say it is too early to predict how sustainable that earnings rate will be.

Regardless, the tentative signs of recovery and strong July figures have been reflected in this morning’s share price move, with the Atomos share price climbing 5.62% higher to $0.47 per share.

Atomos did note it is “more confident” in its medium to long-term growth profile. That’s largely due to the rapid adoption of video technologies, including video streaming, across the globe.

More reading

• Top brokers name 3 ASX shares to sell today
• 3 top ASX dividend shares for income investors in August
• Why you should treat your superannuation like a child
• 3 underloved ASX healthcare shares with strong comeback potential
• Why the Buddy Technologies share price more than doubled in a week

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Atomos Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 risen more than 33% since bottoming out on 23 March this year.

While this has been great for investors already in the market, it also means that ASX shares aren’t as dirt cheap as they were even a few weeks ago. That makes finding bargains just that little bit harder.

But luckily, I think there are still good deals out there. As the investing legend, Peter Lynch, once said, the more rocks you look under, the more investment opportunities you will find. So here’s a rock I’ve been looking under today.

Enter Brickworks Limited (ASX: BKW)

Brickworks is an ASX blue chip share that has a robust presence in the construction and building materials industry (as the name suggests). It’s one of the oldest companies on the ASX, having started life way back in 1934.

Building materials is a highly cyclical industry that tends to boom during good economic times and contract when times aren’t so good. Right now, we happen to be in the latter stage of the economic cycle for obvious reasons.

Luckily, Brickworks has been here before. It also has two other parts to its business that tend to cushion its cyclical business components. Firstly, it has a portfolio of land assets that it rents out for steady profits. Recently, this has expanded to include a warehousing partnership with the eCommerce giant Amazon.com Inc (NASDAQ: AMZN) and Goodman Group (ASX: GMG). Steady income from these kinds of assets greatly improves the Brickworks business model in my view.

Secondly, it owns a significant chunk of other ASX businesses, most of which is in shares of dividend stalwart, Washington H. Soul Pattinson & Co Ltd (ASX: SOL). Soul Patts is known for its diverse range of investments, which include large stakes in TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC). This diversifies Brickworks’ earnings even further in my view.

How does the Brickworks share price stack up?

The Brickworks share price is $16.67 at the time of writing, which I think is dirt cheap. Its 39.4% stake in Soul Patts alone is worth approximately $1.88 billion, which is indicative of significant value given the total market capitalisation of Brickworks is $2.46 billion on current prices.

The company also offers a strong dividend, offering a trailing yield of 3.53% (or 5.04% grossed-up with full franking credits) on current prices. Brickworks has also held steady or increased this dividend every year for more than four decades.

My conclusion? Brickworks is a dirt-cheap share today and a worthy addition to any long-term focused ASX share portfolio. 

More reading

• Why the Sandfire share price is the worst performer on the ASX 200 today
• 3 latest ASX 200 stocks to be downgraded by top brokers today
• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments
• 2 top ASX dividend shares to buy for income in 2020

Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 JB Hi-Fi Limited (ASX: JBH) share price has been one of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) over the last 12 months.

Since this time last year the retailer’s shares have gained a sizeable 52%. This strong form has continued on Thursday, with the JB Hi-Fi share price hitting a record high of $46.30 earlier today.

Investors appear confident that the company will deliver a strong full year result when it hands in its report card on 17 August.

Ahead of the results release, I thought I would take a look to see what the market is expecting from the company.

What is expected from JB Hi-Fi in FY 2020?

According to a note out of Goldman Sachs, it expects JB Hi-Fi to deliver group sales of $8,026.6 million in FY 2020. This is 2.1% ahead of the company’s guidance of $7,860 million and up 13.1% year on year.

In respect to earnings, the broker is forecasting earnings before interest and tax (EBIT) of $519.6 million or $502.5 million on a pre-AASB16 basis. This represents impressive year on year growth of 34.8%.

What will be the drivers of this growth?

The JB Hi-Fi Australia business is expected to contribute EBIT of $408.6 million for the year. Goldman expects this to be driven by like for like sales growth of 13%, the addition of three new stores, and a 100-basis point increase in its EBIT margin.

Elsewhere, the broker is forecasting The Good Guys business to deliver EBIT of $115.9 million. This will be a 51.9% increase on the prior corresponding period. Goldman expects this to be driven by a 12% increase in like for like sales and EBIT margin expansion of 115 basis points.

Not all of its businesses are expected to deliver earnings growth. Goldman Sachs expects the JB Hi-Fi New Zealand to drag on its performance slightly with a $5.4 million loss.

Should you invest?

Goldman Sachs appears to believe the JB Hi-Fi share price has peaked now and has given it a neutral rating with a $44.40 price target.

It prefers rival Harvey Norman Holdings Limited (ASX: HVN) and has a buy rating and $4.60 price target on the retailer’s shares. This compares to its current share price of $3.58.

More reading

• Don’t be blinded by gold fever…consider these ASX dividend shares instead
• JB HiFi and 1 other quality ASX share to buy right now
• 3 ASX dividend shares I like ahead of the August earnings season
• 2 off the grid ASX retail shares for higher returns
• Extended jobkeeper: Which ASX shares to buy?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price rallied 9.6% in morning trade before pulling back to a gain of 0.9% at the time of writing. The rise in the Paradigm share price came after the company reported pain reduction in osteoarthritis patients being treated under a United States FDA (Food and Drug Administration) expanded access program (EAP).

Osteoarthritis is caused by joint damage and is most often experienced by older people. It is a leading cause of disability and impacts 30 million men and women in the US alone. 

The US EAP is a compassionate-use pathway for investigative treatments where there is no comparable or satisfactory therapy options outside clinical trials. However, this is monitored by the FDA and requires the cooperation of the healthcare organisation.

Update

In the update, Paradigm reported a 65% pain reduction in patients with osteoarthritis 12 weeks following the initiation of treatment with company’s product, ‘Zilosul’. This was using the ‘WOMAC Pain Subscale’. The WOMAC Pain Subscale is a self-administered measurement tool used to assess the severity of pain.

Pleasingly, patients in the program reported improvements in pain felt whilst performing common daily tasks such as walking, using stairs, sitting and standing. Patients also reported a reduction in night pain.

Additionally, patients reported tolerance to the treatment with no adverse side effects reported. Patients also released testimonials regarding their satisfaction with the program. The company has released videos featuring professional NFL players detailing their experiences with osteoarthritis caused by joint injuries sustained during their careers. 

Furthermore, Paradigm believes if replicated in a confirmatory Phase 3 clinical study, Zilosul would provide an alternative to the current treatments of moderate to severe osteoarthritis pain. At present, the treatment is NSAIDs (nonsteroidal anti-inflammatory drugs) and Opioids which have undesirable side effects.

CEO comments

Paradigm’s CEO and Interim Executive Chairman, Paul Rennie said “This is a fantastic outcome not only for Paradigm as our first treatment of a cohort of patients in the US under an FDA approved program, but also for all patients that have participated in the program”. He went on to say “We are very encouraged with the EAP results which were reported at 12 weeks, with the same pain scoring system Paradigm (we) will use in its Phase 3 clinical trial…”.

About the Paradigm share price

Paradigm was listed on the ASX in August 2015. Its focus is on repurposing pentosan polysulphate sodium (PPS). A key feature of PPS is its anti-inflammatory and tissue regenerative properties. 

Additionally, injectable PPS is not currently registered in Australia however it is registered in four of seven major global pharmaceutical markets.

Presently, the Paradigm share price is trading at $3.27 which represents a gain of .93% in today’s trade. 

More reading

• 4 exciting ASX biotech shares surging higher today
• 3 ASX medical shares to hold for the long term
• Stock of the day: Paradigm Biopharmaceuticals share price climbs 6% on clinical data
• Why Afterpay, ELMO, Oil Search, & Paradigm shares are racing higher

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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You’ve likely heard that Australia has just entered a period of historic deflation.

Despite what you may be reading in some financial headlines, that’s not all bad news. Far from it…

According to the latest data from the Australian Bureau of Statistics (ABS) the Consumer Price Index (CPI) fell 1.9% in the June 2020 quarter. “This was the largest quarterly fall in the 72-year history of the CPI,” said chief economist for the ABS, Bruce Hockman.

This brings the annual inflation rate to -0.3% for the year through the end of June.

The record price falls were largely due to the government providing free child care and plummeting petrol prices. Rents also headed lower. Not surprisingly, the price of cleaning and maintenance products bucked the trend, gaining 6.2%. Hand sanitiser, anyone?

Why deflation isn’t the Hydra it’s made out to be

I’ll avoid a deep dive into the deflation debate and just skim the surface here.

You’ll most often hear deflation is bad because consumers will put off spending money today if they know they can get the same item cheaper tomorrow.

In a world of hyper-deflation, where prices are falling by, say, 10% each day, that may be true. But if prices are falling by 0.3% per year that’s hardly going to keep you from buying that new couch or pair of running shoes.

No nation in the world has ever experienced anything approaching hyper-deflation. And I’ll stick my neck out and say none ever will.

So why is the Reserve Bank of Australia so focused on its 2–3% inflation target?

The simple answer is debt. According to the Australian Debt Clock, total government debt now stands at over $1.17 trillion dollars. With an inflation rate of 3%, the real value of that debt will fall to ‘just’ $585 billion in 24 years without having to pay back a cent.

Enough said.

Here’s the good news

Not only will the cash in your wallet hold its value — or even gain a bit — in a deflationary scenario, but the real returns (inflation-adjusted) of your stock holdings will gain as well.

The even better news for equity investors is that the latest deflation numbers indicate interest rates should stay at record lows for a long time yet. And the share markets tend to love low interest rates. Beyond that, we can expect continued quantitative easing (QE) from the Reserve Bank of Australia, which also helps fuel equity prices.

But not all ASX shares will benefit equally. In fact, some are likely to suffer.

2 ASX shares to avoid

In general, I’d tread carefully around property developers and real estate investment trusts (REITs) in the current environment. Their time will come again, but many are facing stiff headwinds.

The latest statistics from the ABS show that rents across Australia fell during the last quarter. That marks the first quarterly fall since 1972.

The first ASX share I’d steer clear of is Stockland Corporation Ltd (ASX: SGP). Stockland owns residential, industrial and retail properties, along with retirement homes.

It was a great stock to own in 2019, gaining more than 38%. But 2020 has been a different story, with the share price down more than 30% so far this year. And with a gloomy mid-term outlook for the Aussie property markets, I believe it could have a good bit further to fall from its current share price of $3.22.

The second ASX share I’d avoid is Scentre Group (ASX: SCG). Scentre owns and operates Westfield shopping malls in both Australia and New Zealand. The impact of COVID-19 saw it suspend its interim dividend distribution. And the Scentre share price has already tumbled more than 47% this year.

There’ll be a time to revisit Scentre. But I don’t believe now is that time.

2 ASX shares to buy

It’s no secret the technology sector has, on average, outperformed the broader market this year.

Many tech shares will be resilient in today’s mildly deflationary environment. After all, the price of most electronic goods, and the parts inside them, tend to get cheaper over time regardless. And with remote working, shopping and even dating likely to be a growing trend in the decade ahead, here are 2 ASX shares that are well placed to benefit.

First, Altium Limited (ASX: ALU). The company, with a market cap of $4.3 billion, specialises in electronic printed circuit boards. These are crucial to the growth of the burgeoning 5G market and every kind of smart device you can imagine.

Altium hasn’t fully recovered from its steep plunge in February. The share price is still down 3.6% year-to-date. But at its current price of $33.12, I think it could go a lot higher in the months ahead.

The second ASX share you should consider adding to your portfolio, in my opinion, is Appen Ltd (ASX: APX). Appen, with a market cap of $4.4 billion, provides data to improve artificial intelligence systems, a market with sky-high growth potential.

The Appen share price is up 63.8% since 2 January, but I believe it could have much further to run.

More reading

• Invest $5,000 into these ASX shares immediately
• WAAAX or FAANG? Which ASX tech shares to buy in 2020
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• 3 of the best ASX tech shares to buy and hold until 2030
• WAAAX shares see mixed recovery from COVID-19

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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On Wednesday, the Motley Fool received commentary from Saxo Capital Markets by Australian Market Strategist, Eleanor Creagh. The commentary included some grim predictions which could be particularly relevant to the share prices of ASX banks such as National Australia Bank Ltd. (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) as well as gold miners such as Newcrest Mining Limited (ASX: NCM).

The risk of a double dip recession

According to Eleanor Creagh, there are risk factors that could see Australia enter a double dip recession.

She suggested that Australian Bureau of Statistics data showed that the jobs rebound seen in June is stalling. This is consistent with a flattening of the recovery curve which means that the economy’s rebound after lock downs earlier this year may be starting to wane and that economic growth could be going sideways rather than upwards. Ms Creagh also suggested that there is a considerable degree of uncertainty surrounding the economic recovery, especially as the economic boost resulting from early superannuation withdrawals fades.

According to the commentator, consumer confidence is also stalling as Melbourne has moved back into lock downs and New South Wales is suppressing smaller coronavirus outbreaks.

The market strategist stated;

“To maintain the trajectory of the recovery and avoid the ‘double dip recession’, confidence amongst businesses and consumers is critical in upholding investment, spending, and jobs and re-asserting a self-sustaining trajectory for economic growth and the labour market.”

She also called for ongoing government stimulus, stating;

“The economy did not enter this crisis from a position of strength and amidst signs the recovery is already beginning to plateau the priority of ongoing fiscal support remains.”

A double-dip recession would mean that the current economic recovery would turn around and the economy would once again begin shrinking. This could be bad news for the big banks including NAB and the Commonwealth Bank of Australia.

NAB raised $3.5 billion from shareholders in May in order to strengthen its capital buffer, along with maintaining a modest dividend. This bank has a significant commercial loan book and could face headwinds if consumer confidence dries up and businesses see lower revenue, which could lead to loan defaults. The NAB share price rose 1.56% on Wednesday to $18.18 as APRA changed its recommendation regarding payment of dividends. APRA had previously warned banks against paying dividends but has now downgraded its advice to recommend payment of reduced dividends. The NAB share price is up 37.8% since its 52 week low of $13.20, however, it is down 36.52% since this time last year.

Commonwealth Bank of Australia also faces risks if there is a double dip recession. This bank is Australia’s biggest lender and had almost $760 billion in loans on its balance sheet at the end of the 2019 financial year. A double dip recession could hit CommBank significantly as it sees more borrowers unable to repay their business loans, consumer loans and mortgages. The CommBank share price was up 1.11% on Wednesday to $73.01. Its share price is up 36.62% from its 52 week low of $53.44, however, it has dropped 12.46% since this time last year.

The outlook for gold mining shares

Eleanor Creagh pointed out that yields on government bonds, after inflation, have collapsed. In addition, the United States dollar index has fallen, showing a weaker US dollar. She pointed out that as geopolitical uncertainties and fear around the pandemic remain elevated, gold has rallied – breaking through its 2011 high and reaching a new record high. The writer suggests that part of the reason for this is that yields after inflation on government bonds are now below zero.

According to the commentator, moves by the US federal reserve to support the US economy are putting upward pressure on the gold price, which she predicts may reach as high as $2000 in spot trading. However, she suggests it is likely that gold has reached a temporary top in the short term. She believes it is likely that long-term prices will increase after a short-term decline as central banks become more and more influential.

The commentator stated;

“Gold has a growing importance within cross-asset portfolios and although tactically, the run higher may be stretched and due for a period of consolidation, long term demand for gold remains.”

This could be good news for miners with low costs that could easily work through a short-term pullback in gold prices. It could also have long-term implications for the share prices of gold miners such as Newcrest Mining. 

Newcrest had an all inclusive statutory cost of $878 per ounce in the June quarter of 2020. This means that it can likely still make a significant profit per ounce even if gold prices temporarily fall. Additionally, if the strategist’s prediction for long-term gold prices is accurate, Newcrest could see significant benefit from a higher gold price in the future. The Newcrest share price was down 0.8% on Wednesday to $36.06. It has also fallen a further 1% so far today and is currently trading at $35.70. The Newcrest share price is up 74.5% from its 52 week low of $20.70 and is up 1.62% since this time last year. 

More reading

• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• Here are the dividends this broker thinks CBA and the big four will pay in 2020
• ASX 200 drops 0.2%, APRA boosts big 4 ASX banks
• ASX big banks stocks outperform even as APRA caps dividends
• APRA eases dividend restrictions, ASX bank shares rally

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 IOOF Holdings Limited (ASX: IFL) share price has dropped by 5.88% at the time of writing, following a business update by the company for the fourth quarter of the 2020 financial year.

What was in the announcement?

According to the announcement, IOOF’s funds under management, advice and administration (FUMA) grew to $202.3 billion at 30 June, an increase of 3.4% during the fourth quarter of the 2020 financial year.

IOOF’s financial advice business had net outflows of $93 million compared to outflows of $853 million in the prior corresponding period (pcp).

The company’s portfolio and estate administration had net inflows of $398 million, excluding early release of superannuation, compared to inflows of $561 million on pcp.

IOOF’s investment management business had a net outflow of $51 million, compared to $181 million on pcp. Its pension and investments business had net outflows of $183 million, excluding early release of super.

The company paid out $743 million in the early release of superannuation from 20 April to 30 June 2020.

Commenting on IOOF’s FUMA result, CEO Renato Mota stated:

The Milestone of over $200 billion in FUMA is testament to IOOF’s increased scale and the benefits of the diversification of our business. The transformative acquisition of the P&I business contributes to our business model resilience and will be important as we look to a  post  COVID-19 recovery and supporting long-term growth in FUMA and earnings.

The recent recovery in equity markets has been the major contributor to the $6.7 billion uplift in FUMA and pleasingly, we have continued to attract strong flows into our platforms. That said, the impacts of the COVID-19 pandemic are continuing.  Our advisers are seeing first-hand client concern and uncertainty around macro-economic conditions. This client sentiment is particularly apparent through withdrawals associated with the Early Release of Superannuation scheme and subdued flows in Financial Advice.

IOOF expects to report underlying net profit after tax of around $128 million to $130 million for the 2020 financial year. Underlying net profit after tax from continuing operations is expected to be $123 million–$125 million.

About the IOOF share price

IOOF is an Australian financial services company with a history dating back to 1846. It offers superannuation, financial advice, investment management and trustee services. 

In July, IOOF announced that a class action brought against the company in relation to a breach of superannuation directors duties was dropped, with no payment made to those bringing the claim.

The IOOF share price is up 82.35% since its 52-week low of $2.72, however, it is down 37% since the beginning of the year. The IOOF share price is down 15.01% since this time last year.

More reading

• Why IOOF, IGO, Janus Henderson, & Qantas shares are dropping lower

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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