The AGL Energy Limited (ASX: AGL) share price is in the red this morning after the company posted a largely negative earnings card for FY22.

The energy giant’s shares are currently down 3.19% at $7.90 each. Earlier, they had been as low as $7.77 and as high as $8.05.

Let’s go over the highlights of the report.

What did AGL report?

• Revenue up 20.8% year-on-year (YoY) to $13.22 billion
• Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) down 27% YoY to $1.21 billion
• Underlying profit after tax down 58% YoY to $225 million
• $150 million reduction in operating costs
• Final unfranked dividend of 10 cents per share

Earnings were said to be lower in FY22 due to cheaper wholesale customer prices and increased costs to meet peak energy demand. Other headwinds that battered the stock included plant outages, market volatility, customer churn, and increased competition from residential solar power generation.

Despite the company’s problems in FY22, AGL noted that its underlying profit of $225 million fell within previously posted guidance estimates.

Some relief for the company’s bottom line was found in the form of a $150 million reduction in the company’s operating costs and a stable total of services to customers provided at 4.2 million, which it achieved by maintaining market share amid churn and competitive forces.

A final unfranked dividend of 10 cents per share was announced, representing a payout ratio of 75% of the company’s underlying profit after tax. The dividend will be paid on 27 September.

What else happened in FY22?

On a broader macro scale, electricity prices increased in FY22 due to geopolitical events and a rise in commodity prices for coal and gas.

In May, AGL scrapped its demerger plans to divide the business into two separate entities. Plans were thrown out over concerns that it would lower the company’s valuation and hamper efforts to reduce carbon emissions. AGL incurred a $125 million cost from withdrawing from the plans in FY22.

AGL also made some progress with its plans for energy hubs. One project is a 250-megawatt battery that is being built and is expected to be operational in 2023. Another project is a feasibility study to assess the development of a green hydrogen production facility.

What did management say?

Commenting on the results, AGL managing director and CEO Graeme Hunt said:

AGL’s FY22 results delivered an underlying profit after tax within guidance, reflecting the resilience of AGL’s underlying business against a backdrop of challenging energy industry and market conditions that have intensified in the second half.

What’s next?

AGL said it is expected to post guidance for FY23 in September. As part of issuing guidance, it also expects to give investors an update on the company’s strategic direction following the scrapping of its demerger plans.

The company expects to benefit from higher wholesale electricity prices from FY24 onwards.

AGL also said the contracts of its coal and gas positions would help it shelter against the cost rises of the commodities.

AGL share price snapshot

The AGL share price is up 24% year to date. Over the same period, the S&P/ASX 200 Index (ASX: XJO) is down by 6%.

AGL has a market capitalisation is $5.49 billion.

The post AGL share price dips after 58% profit slash appeared first on The Motley Fool Australia.

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More reading

• Earnings preview: Here’s which ASX shares are reporting today
• Hoping to pounce on AGL shares? Here’s what to watch when the energy giant reports this week
• Guess how much AGL has paid in dividends over the past 5 years?
• AGL share price down amid Fortescue Future Industries hydrogen hub news
• Why was the AGL share price undercooked in July?

Motley Fool contributor Matthew Farley 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 Stockland Corporation Ltd (ASX: SGP) share price is on the move today following the release of the company’s FY22 results.

At the time of writing, the Stockland share price is trading 1.5% in the red at $3.75 apiece straight from the open.

Stockland continues asset, profit growth in FY22

Key takeouts from the period include:

• Booked statutory profit of $1.38 billion, a 25% gain on the same period for FY21
• Funds from operations (FFO) recorded at $851 million, up 8% year on year
• FFO per security of 35.7 cents, up around 8% on the same time in FY21
• Full-year total distribution per security (dps) of 26.6 cents, signifying an 8.1% growth on FY21
• Net tangible assets (NTA) of $4.31 per security, again up around 8% from 30 June 2021

What else happened last period for Stockland?

Stockland again achieved a return on invested capital (ROIC) above the target 6-9%, securing a 10% recurring ROIC.

It delivered a statutory profit of $1.38 billion, up 25% on the same time last year. Its commercial property business came in with a FFO of $5.53 million, whereas it saw a valuation uplift to $725 million.

In particular, the workplace portfolio delivered a FFO of $110 million, itself flat on the year. Meanwhile, logistics FFO grew 37% year on year to $155 million. 

Management commentary

Speaking on the announcement, Stockland CEO, Commercial Property, Louise Mason said:

Our Logistics development pipeline continues to offer attractive returns on a risk-adjusted basis and significant future earnings growth, notwithstanding the impact of elevated construction costs.

Our development pipeline is located in prime Eastern Seaboard markets that continue to benefit from constrained supply and elevated occupier demand and comprises land holdings that have been acquired at attractive points in the real estate cycle.

What’s next for Stockland?

In FY23 Stockland forecasts FFO per security in the range of 36.4 to 37.4 cents before tax, with a 5-10% estimated tax bill.

Meanwhile, distribution per security is expected to be within the targeted payout ratio of 75-85% of after-tax FFO.

In the past 12 months, the Stockland share price has slipped 10%.

The post Stockland share price slips as statutory profit lifts 25% in FY22 appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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 Pentanet Ltd (ASX:5GG) share price is blasting into the green today following the release of the company’s FY22 earnings results.

At the time of writing, shares in the internet, gaming and telecommunications provider are trading 10.29% higher at 37.5 cents apiece.

Double-digit revenue and profit growth

Key takeouts for the quarter include:

• Revenue of $16.8 million, a gain of 54% on the previous ear FY21
• Gross profit of $7.4 million, another 55% improvement on FY21
• Gross margin increased by 100 basis points to 44%
• Net loss after tax of $7.9 million, an improvement from the FY21 reported net loss of $13.7 million
• Balance sheet well positioned with $13.4 million in net cash at 30 June 2022
• Recurring revenue increased by 59% to $15.2 million – now 90% of total revenue in FY22

What else happened for Pentanet?

Telco subscribers were up 34% from the previous year to 16,674, with low churn of around 0.95%. Fixed wireless customers now comprise 40% of total subscribers at the end of FY22.

As a result, revenue grew 54% and gross profit also expanded by 55% year on year to approximately $7.5 million.

The bolus of this revenue – 90% to be exact – is now derived from recurring revenue sources.

As a result, Pentanet came in with a net loss of around $8 million, an improvement from last year’s after-tax loss of $13 million.

Moreover, average recurring revenue per user (APRU) also increased from $80 to $82 in FY22, whilst fixed wireless APRU remained steady year on year at $87.

Management commentary

Speaking on the announcement, Pentanet managing director Stephen Cornish said:

The last 12 months have seen Pentanet secure its place as a leader in both telecommunications, cloud gaming and esport in Australia. We seized the opportunity to bring new products and technology to market, and now the foundations have been laid for accelerated sustainable growth across our complementary business sectors.

At the same time the business continued to deliver substantial growth in subscriber numbers, which generated a strong uplift in revenue and gross profit. Earnings quality remained high with recurring earnings making up 90% of revenue and the churn rate remaining below 1%.

I’ve said it before and I want to reiterate for you today – Pentanet is so much more than just another telco. With our ongoing focus on impactful innovation, we are not only contributing to the development of Australia’s digital future but also improving and increasing the ways we connect digitally and IRL.

Pentanet share price snapshot

In the past 12 months, the Pentanet share price has slipped more than 43% into the red, but has climbed 17% higher in the past month of trade.

The post Pentanet share price rips 10% higher on double-digit profit growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pentanet Limited. 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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With interest rates rising and investors anxious about an economic downturn, ASX shares in the retail sector have been hammered for most of this year.

While the devaluation has affected the entire industry, it’s hit online retailers especially hard.

Technology shares have also plunged in 2022, so it’s little wonder businesses that intersect between the two sectors would struggle to maintain their valuations.

Analysts at Firetrail, in a memo to clients, took US giant Shopify Inc (NYSE: SHOP) as an example of what’s happened globally.

“Shares in US e-commerce platform Shopify fell over 14% in late July after the company announced it was cutting 10% of its workforce,” read the memo.

“Shopify, like many other online retailers, had bet that COVID would permanently shift the channel mix away from physical retail. However, now that the US economy has reopened, e-commerce adoption has fallen back to the pre-COVID trend line.”

Locally, the Firetrail team cited how Temple & Webster Group Ltd (ASX: TPW) and Kogan.com Ltd (ASX: KGN) have seen their share prices halve so far this year. Redbubble Ltd (ASX: RBL) has lost a painful 70%.

A golden buying opportunity for online retail shares?

But, perhaps in a contrarian view, Firetrail questioned whether this presents a buying opportunity for online retail stocks.

“Assuming a reversion to e-commerce adoption growth in 2023/2024, could value be emerging in the online retailers?”

The Motley Fool chief investment officer Scott Phillips agreed with this proposition.

“It seems to me that the market has decided that, because the economy might slow (maybe even dramatically) many – most – retail stocks are worth nearly nothing,” he said.

“But let’s say you have a 5, 7 or 10 year time horizon. As long as these businesses aren’t significantly or permanently damaged by a recession, they’ll come out the other side. They’ll probably go on to deliver even higher sales and profits in the years ahead.”

Already some investors are waking up to this opportunity, sending some ASX shares to the moon in a hurry over the past few weeks.

Temple & Webster has enjoyed a 57% rocket upwards over the past month, Kogan has travelled 39% up, and Cettire Ltd (ASX: CTT) shares are a crazy 132.5% higher.

What are the chances that business is lost forever?

According to Phillips, the devaluation seen this year assumes a permanent loss of business.

But the probability is that that’s not true over a long period, even if a recession rudely interrupts for a brief time.

“If you could buy an asset that might struggle for a short time, then go back to its successful past… well, a share price that suggests relative Armageddon is likely to be, in hindsight, cheap.”

The Firetrail team noted how Woolworths Group Ltd (ASX: WOW) took this attitude when it recently decided to buy online retailer Mydeal.Com Au Ltd (ASX: MYD).

“The company offered a 61% premium to market [price] to acquire listed marketplace Mydeal.com.au in May.”

The post Could these devastated ASX shares make a roaring comeback? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Cettire Limited, REDBUBBLE FPO, Shopify, and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cettire Limited, Kogan.com ltd, REDBUBBLE FPO, Shopify, and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Cettire Limited and Temple & Webster Group Ltd. 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 Newcrest Mining Ltd (ASX: NCM) share price is climbing today after the company announced its FY22 results.

The gold miner’s shares are currently up 4.02% to $19.42 apiece. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is climbing 0.08% today.

Let’s take a look at what Newcrest reported to the market.

Newcrest reports

Highlights of Newcrest’s FY22 results include:

• Statutory and underlying profit fell 25% on FY21 to US$872 million
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell 16% to US$2.054 billion
• Gold production fell 7% to 1.956 million ounces
• Copper production dropped 15% to 120,650 tonnes
• Earnings per share (EPS) fell 27%
• Fully franked final dividend of US 20 cents per share compared to a 40 cents per share final dividend in FY21

What else did Newcrest report?

Newcrest’s underlying profit fell by $292 million compared to the prior corresponding period (pcp) due to lower production at the Cadia mine in NSW. This was due to a planned replacement and upgrade of the SAG mill motor in November 2021.

Production at the Lihir mine was also lower, due to maintenance, downtime and less autoclave availability.

Gold and copper sales fell due to lower production. Operating costs also suffered due to inflation pressure on oil, gas, steel and labour. Shipping costs were also higher.

The realised copper price leapt 19% on FY21 to US$4.36 a pound, partly offsetting these costs.

Realised gold price jumped by just one dollar to US$1,787 per ounce.

Despite this profit result, analyst consensus had been pointing to a lower underlying profit of US$845 million, the Australian Financial Review reported. Analyst Dan Morgan also labelled today’s results “positive versus market fears”, according to The Australian.

The Newcrest final dividend of 20 cents per share is half of that declared at the same time last year. However, it is higher than the final dividend declared in FY20.

Management commentary

Commenting on the results, CEO Sandeep Biswas said:

Newcrest has delivered a strong performance in FY22 with our operations producing just under two million ounces of gold at an All-In Sustaining Cost of $1,043 per ounce.

We were particularly pleased with our costs trending lower in the second half of the year, with Cadia achieving its lowest ever annual All-In Sustaining Cost of negative $124 per ounce.

Our balance sheet has also remained extremely robust with significant liquidity available to support our growth aspirations.

What’s ahead?

Newcrest is forecasting it will produce between 2.1 and 2.4 million ounces of gold in FY23, and 135 to 155,000 tonnes of copper.

The company is predicting a total all-in sustaining cost (AISC) of $2.1 to $2.4 billion.

Newcrest share price snapshot

The Newcrest share price has dropped around 24% over the past year, while it has lost around 20% year to date.

However, in the past month, Newcrest shares have leapt 4%.

For perspective, the ASX 200 index has lost nearly 6% in the past year.

The post Newcrest share price lifts despite profit falling 25% appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

New York Stock Exchange operator Intercontinental Exchange (NYSE: ICE) knows a few things about investing. The company has booked monster profits from two crypto investments and is now investing in another area of its business. This time, the company could change the game in the giant mortgage industry. Here’s what happened.

What’s next after crypto?

In December 2014, before anyone had ever heard of Bitcoin, Intercontinental Exchange invested $10 million for 1.4% ownership of a little-known crypto exchange called Coinbase Global (NASDAQ: COIN). The exchange was firmly entrenched in the crypto frenzy years later. Though it was almost unnoticeable at the time of its investment, it eventually sold its stake when Coinbase IPO‘d in April 2021 for a mind-numbing sum of $1.24 billion.

Intercontinental Exchange’s Coinbase investment foreshadowed another crypto-related investment. Bakkt (NYSE: BKKT) was initially launched in 2018 with majority backing from Intercontinental Exchange. The company was formed to provide digital wallets to institutional and consumer users to buy, sell, and spend digital assets. Of course, digital assets include crypto but also extend to airline miles, hotel loyalty points, and credit card points.

In late 2021, Bakkt merged with VPC Impact Acquisition, a special purpose acquisition company (SPAC) sponsored by Victory Park Capital, and the shares went public in October. In its annual report a few months later, Intercontinental Exchange booked an astonishing $1.4 billion gain from the transaction. Unlike its Coinbase investment, though, the exchange still holds its stake in Bakkt because it sees a future in digital currency, even if it doesn’t include cryptocurrency.

More recently, however, the SPAC has made a more significant investment in the mortgage tech company Black Knight (NYSE: BKI). In May, Intercontinental Exchange announced it had agreed to acquire Black Knight for $85 per share, implying a market value of $13.1 billion. Prior to the acquisition, the exchange had a competing mortgage tech business.

Intercontinental Exchange’s mortgage tech business provides software for loan officers, mortgage origination, closing, funding, and compliance. Black Knight’s mortgage tech business overlaps in origination and expands the combined company’s capabilities to multiple listing service (MLS) solutions and loan servicing. In addition, Black Knight is a leading data analytics provider in the real estate market.

Before the agreed tie-up, Black Knight made a significant mortgage tech investment of its own. In February 2022, the company completed a deal to acquire the remaining shares of Optimal Blue that it did not already own. Optimal Blue’s mortgage tech business provides a software suite that aids its customers in carrying out secondary transactions in the mortgage market. Ironically, Black Knight funded part of the deal with 37 million shares of Dun & Bradstreet Holdings it owned from a previous investment.

Altogether, the complementary capabilities of the mortgage tech companies provide one of the first end-to-end software packages on the market. On top of that, the combined company will have a mountain of real estate and mortgage data it can use to bolster its data and analytics business.

Intercontinental Exchange points out that the average origination costs have ballooned from about $4,000 in 2009 to $9,000 in 2021. The company believes the new mortgage tech segment can shave off $2,600 — nearly 30% — of those costs. Savings at that level make hiring Intercontinental Exchange a very compelling proposition, especially considering the massive number of originations some banks and mortgage companies do.

Is Intercontinental Exchange a buy right now?

The Intercontinental Exchange/Black Knight mortgage tech portfolio is a compelling reason to get excited about the stock. The mortgage portfolio adds to the exchange’s existing exchange segment consisting of 13 regulated stock and commodity exchanges, including the New York Stock Exchange and six clearing houses.

The Black Knight deal is not expected to close until the first half of 2023, but Intercontinental Exchange expects the accretive to its earnings per share in the first year after the deal closes. In addition, the deal should cut expenses by $200 million and provide $125 million in revenue synergies.

The company’s stock is down about 19% this year because rising mortgage rates could potentially slow down the real estate market and crimp fees earned from mortgage originations.

If you’re worried about the same things, consider that Intercontinental Exchange projects recurring revenue in its mortgage tech segment will increase from 50% of its revenue mix to 70% after the Black Knight acquisition. The stock’s fall could represent an outstanding opportunity for long-term investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post This company profited $2.6 billion from crypto. What is it investing in now? appeared first on The Motley Fool Australia.

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BJ Cook 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 Bitcoin and Coinbase Global, Inc. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The TPG Telecom Ltd (ASX: TPG) share price is taking a beating today after providing its results for the first half.

Shares in the telco giant are down 9.44% to $5.99 as the market takes decisive action. Let’s take a look at the important news for TPG shares.

TPG share price dumps amid uneventful half

• Service revenue relatively flat year on year at $2.19 billion
• Average revenue per user (ARPU) up 1% to $31.80 per month
• earnings before interest, tax, depreciation, and amortisation (EBITDA) down 5.3% year on year to $837 million
• Net profit after tax (NPAT) up 114% to $167 million
• Adjusted NPAT (excludes restructing costs) up 3.8% to $331 million
• Fully franked interim dividend of 9 cents per share, up 12.5%

At first glance, TPG’s earnings growth might look mind-blowing. However, the 114% growth is due to a tax credit of $86 million. As such, this doesn’t exactly reflect the underlying earnings growth within the business.

For this reason, the company’s EBITDA metric gives a better perspective on the core business. When excluding restructuring costs, EBITDA was slightly lower, but management pointed to positive momentum.

What else happened in the half?

Importantly, TPG witnessed a strong increase in mobile subscribers during the half. Net increases came to 135,000 over the six months. Similarly, fixed wireless subscribers grew by 113,000, putting the company on track for its 160,000 target for FY22.

Furthermore, a highlight for TPG during the first half involved telco competitor Telstra Corporation Ltd (ASX: TLS). The announced plan, which was released on 21 February, would see Australia’s two largest telecommunications companies enter a network sharing agreement. Since the announcement, the TPG share price has trended upwards.

According to today’s release, the regulatory decision is still with the ACCC and an outcome is expected on 2 December 2022. If the deal is approved, TPG could see its mobile coverage extended to 98.8% of the population with the help of Telstra.

What did management say?

Commenting on the result, TPG managing director and CEO Inaki Berroeta said:

The simplicity and value with which TPG has always been synonymous are more relevant today than
ever – and our focus positions us to win at a time when the market is becoming more disciplined.

We are experiencing a welcome return of momentum in customer growth and transforming our network position to deliver a step change in our ability to compete in all segments, in all technologies, and across the country.

What’s next?

Regarding the company’s outlook, Berroeta mentioned that TPG is transitioning to a “new phase of growth”. In turn, management plans for earnings momentum to accelerate in the second half.

Additionally, the targeted $125 million to $150 million in merger synergies is said to be on track in 2022. Notably, this is a year ahead of what was initially planned.

Finally, the record date for the interim TPG dividend is 14 September. After that, shareholders can expect the payment to land in their accounts on 12 October.

TPG share price snapshot

In contrast to Telstra, the TPG share price has been firing on all cylinders this year. With a return of 2.9% year-to-date, some might say it has been received with great reception. Meanwhile, Telstra shares are 2.8% worse off than at the end of 2021.

At present, TPG shares are offering up a dividend yield of approximately 2.9%.

The post TPG share price tumbles 9% on first half results 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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. 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 Cleanaway Waste Management Ltd (ASX: CWY) share price won’t be trading this morning as it undertakes a $400 million capital raise. It has also announced an acquisition.

If that wasn’t enough to keep investors busy, the waste management group also released its full-year results at the same time.

But you won’t be able to use the Cleanaway share price as a barometer for its earnings news. The shares are unlikely to start trading until Monday.

Cleanaway share price undergoes a capital raise

This is to give the company time to pass the cap around. It’s looking to do a $350 million fully underwritten institutional placement. It will also undertake a $50 million non-underwritten share purchase plan for existing shareholders.

The offer price for the placement is set to $2.50 a pop. This represents a 7.7% discount to the last closing price for Cleanaway shares yesterday.

The price under the SPP will be the same as the placement or at the five-day VWAP – whichever is lower.

How Cleanaway will use the proceeds from the capital raise

Proceeds from the raise will be used to fund Cleanaway’s growth strategy and to pay for the takeover of Global Renewables Holdings Pty Ltd (GRL). Cleanaway is buying the business for $168.5 million.

The acquisition price represents 7.9 times the enterprise value of the target’s actual FY22 (FY22A) pro forma EBITDA.

Cleanaway believes it’s paying an attractive price, particularly as it regards itself as the natural owner of GRL.

What the acquisition means to Cleanaway

GRL is a licensed composting facility that processes ~20% of Sydney’s ‘Red bin’ household waste at its strategically located Eastern Creek site. It delivers ~30% landfill diversion and better carbon outcomes compared to landfill.

The bidder estimates that the deal will be 3.7% EPS accretive on a pro forma FY22A basis. It also believes there is incremental earnings upside as additional capital is deployed into growth projects targeting a double-digit return.

Stronger sales but lower profits

Meanwhile, management handed in its earnings report card that showed an 18.4% increase in net revenue to $2.6 billion.

But its underlying earnings fell due to costs linked to its acquisition and integration of the Sydney Resource Network (SRN).

Summary of Cleanaway’s FY22 results  

• Net revenue increased 18.4% to $2,603.8 million
• Underlying Earnings before Interest and Tax fell 0.6% to $257.1 million
• Cash flow from operating activities increased 9.9% to $466.3 million
• Total dividend per share increased 6.5% to 4.9 cents
• Statutory net profit fell 45.4% to $80.6 million

The big drop in the statutory profit is not only related to SRN but also the New Chum landfill rectification post floods, leadership transition and equipment loss in the Health Services business.

Management commentary

The managing director of Cleanaway, Mark Schuber, commented:

In a year of significant challenges posed by a global pandemic, natural disasters, supply chain disruptions and emerging inflation, Cleanaway delivered a strong financial performance.

While Cleanaway is not immune to inflationary pressures, we do have mechanisms within many of our contracts that allow us to recoup rising costs over time, but there is a time lag on our ability to recover these amounts, which has resulted in a temporary impact on margins.

Outlook

Cleanaway is expecting to deliver stronger earnings in FY23 compared to the last financial year. This is due largely to the full-year contribution of SRN, underlying growth and returns from its growth initiatives.

It expects underlying EBITDA to range between $630 million and $670 million for this year. So far, it believes it is on track to deliver a result at the mid-point of this range.

The guidance excludes the ~$21 million in annualised EBITDA contribution from the GRL acquisition. Management isn’t willing to bank that in just yet as material factors, like volumes into post collections assets and labour availability, can affect the outcome.

The post Cleanaway share price halted amid results, $400m cap raise and acquisition appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau 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 Latitude Group Holdings Ltd (ASX: LFS) share price is down in early trade Friday after the first-half results for FY22 and the exit of its chief executive were announced.

At the time of writing, the financial services provider’s shares are down 0.63% to $1.58 apiece.

What did the company report?

• Statutory net profit after tax (NPAT) of $30.6 million, down 57% half-on-half and down 66% year-on-year (YoY)
• Cash net profit after tax of $93 million, down 11% YoY
• Total operating income of $370.4 million, down 9% YoY
• Dividend remains the same as 2H21 and 1H21 — 7.85 cents per share fully franked
• Managing director and chief executive Ahmed Fahour to retire by the end of August 2023 after more than four years in the position

What else happened in 1H22?

The major event for Latitude during the half-year was its attempted acquisition of the buy now, pay later business of Humm Group Ltd (ASX: HUM).

The $250 million proposal was ultimately mutually terminated. While neither party officially put up a reason for backing out, the business’ poor performance updates likely didn’t help.

The market consensus seemed to be that Latitude dodged a bullet. The Latitude share price rocketed up after the cancellation of the deal, while Humm’s valuation plummeted.

Earlier this month, which was well after the first half ended, Latitude sold its insurance arm Hallmark to St Andrew Insurance Group.

What did management say?

Fahour said of the first-half result:

The cash NPAT result of $93 million, which is above consensus forecast, and our strong underlying balance sheet highlight Latitude’s competitive and strategic advantage at a time of economic uncertainty. We have positioned the business to take advantage of the growth opportunities that we believe will emerge in the next 12-18 months. 

He then said of his departure:

While this is a difficult decision, after four years as CEO, now is the right time to prepare for my departure next year and support the Board as it plans for my succession as chief executive.

Getting Latitude ready for life as a public company and then realising that goal during a global pandemic with last year’s IPO is something that I am particularly proud of.

What’s next?

Latitude declined to give specific guidance for the second half and the full year.

However, the board stated:

Despite increased funding costs with the sharp rise in official interest rates in Australia and New Zealand, product re-pricing and other implemented measures will help offset the impact on margins. 

Latitude will gain further benefits from the full integration of Symple Loans, the growth in travel, cost discipline and productivity increases.

While unemployment remains low, Latitude anticipates delinquencies to stay below historical levels and it will persist with a prudent approach to credit underwriting. Receivables growth should be less affected by elevated repayments as higher cash rates erode excess consumer savings and governments end COVID-related financial assistance. Latitude’s instalments business will also benefit as the higher cash rate adds to the attraction of its ‘interest free’ proposition. 

Latitude Group share price snapshot

The Latitude share price has dipped more than 20% this year to date.

However, it has rallied nicely from its 23 June trough, having put on more than 47% since then.

The dividend yield currently sits at an eye-popping 9.9%.

The post Latitude share price slides as CEO exits, profit plunges appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 Limited. 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 recession talk in Australia and across the globe this year. It was seemingly spurred by rife inflation and resulting interest rate hikes, both adding to the soaring cost of living. But such recession concerns might have sparked a buying opportunity for some S&P/ASX 200 Index (ASX: XJO) shares.  

And two in particular are catching the eyes of fund managers. Let’s take a look at the ASX 200 shares tipped to gain if recession fears fade.

Are these ASX 200 shares worth looking at?

Two sectors have been tipped as post-recession risk winners; lithium and building.

And TMS Capital’s Ben Clark and Marcus Today’s Henry Jennings told Livewire these ASX 200 shares will be their top picks if recession risks waver.

Pilbara Minerals Ltd (ASX: PLS)

Jennings told the publication that, if China emerges, COVID-19 fades into the background, and a recession doesn’t occur, the world will likely ramp up its push towards electric vehicles.

And with that potential trend in mind, the fundie likes the look of lithium favourite Pilbara Minerals.

He also said his head has been turned by upcoming Australian lithium producer Core Lithium Ltd (ASX: CXO).  

The Pilbara Minerals share price closed on Thursday at $3.06.

Reece Ltd (ASX: REH)

Looking to an entirely different sector, Clark said TMS Capital has been buying shares in ASX 200 plumbing and bathroom products supplier Reece. He told Livewire:

It’s been sold down aggressively, and it’s because of concerns about building and renovation activity, but I think that the renovation market here might hold up better than expected. Certainly, if recession fears fade it will. 

But it’s the company’s MORSCO business that’s really drawn Clark’s eye. MORSCO is a leading US distributor of plumbing, waterworks, and heating and cooling equipment. It was snapped up by Reece in a $1.9 billion acquisition in 2018. The fundie continued:

MORSCO is the biggest player in places like Florida and Texas where there’s huge amounts of house building and renovation happening. We still see some really good forward progress for Reece and it will certainly move if the market starts to get less bearish on a recession.

At Thursday’s close, shares in Reece were worth $16.25 apiece.

The post 2 ASX 200 shares set to soar if we manage to avoid a recession: experts appeared first on The Motley Fool Australia.

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

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