The South32 Ltd (ASX: S32) share price has edged higher since announcing its FY22 half year results last Thursday.

The mining outfit delivered strong earnings growth along with a bumper dividend which pleased investors.

Although at yesterday’s market close, South32 shares finished 0.22% lower to $4.56, they are around 2.5% higher since 17 February. This is when the diversified metals miner released its results to the ASX.

What’s the details with the South32 dividend?

In the half year report for the 2022 financial year, South32 reported strong performance across key metrics.

In summary, group statutory profit after tax increased by US$979 million to US$1,032 million in H1 FY22. The company benefited from portfolio changes completed in FY21, as well as a broad recovery in commodity prices.

Underlying earnings jumped by US$868 million to US$1,004 million through higher average realised prices for commodities, particularly metallurgical coal. The latter attributed US$526 million over the period to South32’s coffers.

The group also achieved a US$704 million increase in free cash flow from operations, excluding EAI, to US$840 million.

Overall, the company finished the first half with a net cash of US$975 million, up from US$406 million in the prior year.

The Board declared a fully franked interim dividend of US 8.7 cents per share. This represents a 621% jump from the US 1.4 cents declared in H1 FY21.

Management noted that the latest dividend equates to a payout ratio of 40% of cash earnings.

The company’s dividend policy is to distribute a minimum 40% of cash earnings in half financial year.

It is worth noting that there is a capital management program that has been active since FY18. This returns excess capital efficiently through an on-market share buyback.

The Board further expanded its capital management program by US$110 million to US$2.1 billion, leaving US$302 million to be returned by 2 September 2022.

When can South32 shareholders expect payment?

South32 will pay the interim dividend to eligible shareholders approximately 6 weeks away on 7 April.

To be eligible for the latest dividend, you’ll need to own South32 shares before the ex-dividend date on 10 March. This means if you want to secure the dividend, you will need to purchase South32 shares on or before 9 March.

In case you are wondering, the company is not offering a dividend reinvestment plan (DRP) to shareholders.

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Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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Shares in Sonic Healthcare Limited (ASX: SHL) finished the day down on Monday after the company released its financial results for the half year ended 31 December 2021.

The Sonic Healthcare share price finished the day 3.59% down at $36.25 on Monday after collapsing early in the session.

Sonic Healthcare share price slips despite strong growth

The company outlined several investment highlights, including:

• Revenue growth of 7% to $4.8 billion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 18% to $1.5 billion
• Net profit growth of 22% to $828 million
• Record financial performance driven by pandemic testing and base business growth
• $585 million invested in synergistic acquisitions/joint ventures in the period with active pipeline of further opportunities
• Base business revenue (ex-COVID testing) up 4.3% versus H1 FY2021 and 2.5% versus H1 FY2020 (constant currency, organic growth)
• Gearing at record low level, approximately $1.4 billion of available liquidity, on-market share buy-back announced as part of active capital management
• Dividend increase of 4 cents (11%) to 40 cents (100% franked) for the FY2022 interim dividend.

What else happened this half for Sonic?

Sonic’s total revenue growth for the half year was 7%, “enhanced by COVID-19 testing revenue in Sonic’s Laboratory division” the company said.

Excluding COVID-19 testing, base revenue grew by 4.3% versus the same period last year, and 2.5% versus H1  – what Sonic calls the pre-pandemic.

While sales grew this half, EBITDA also grew 18%, driven mainly by operating income growth of 20% in the company’s laboratory division, again enhanced by COVID-19 testing.

As such, laboratory division margins lifted off by almost 400 basis points from 30.8% to 34.3%. However, radiology margins were lower “due to pandemic impacts and the relatively low margin of the acquired EMI business”.

The company was pleased with the results that were seen vertically down throughout the profit and loss statement, particularly in terms of efficiency and growth.

“Net profit growth of 22% on 7% growth in revenue demonstrates the operating leverage in Sonic’s businesses”, the company remarked.

Management commentary

Speaking on the announcement, Sonic CEO Dr Colin Goldschmidt said:

Sonic Healthcare’s 38,000 staff have produced outstanding operational and financial performances in the last six months through their unwavering commitment to the tenets of Sonic’s Medical Leadership culture, promoting the provision of exceptional healthcare services. The COVID-19 pandemic continued to throw up new challenges on almost a daily basis, and our people responded magnificently. I sincerely thank all of our staff for their dedication and flexibility during these trying times.

What’s next for Sonic?

Sonic announced on 21 February 2022 that it wanted to undertake an on-market share buy-back of its shares. It has the approval of up to $500 million, per the release.

Aside from that, no formal guidance was provided by the company.

Sonic Healthcare share price snapshot

In the last 12 months, the Sonic Healthcare share price has climbed 9.09%. This year to date, however, it has struggled and is down 22%.

Even in the past month, shares have fallen almost 7% and are sliding by around 3% over the previous week of trading.

The post Record financials not enough: Sonic Healthcare (ASX:SHL) share price sinks post-earnings 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 recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Reliance Worldwide Corporation Ltd (ASX: RWC) closed Monday up marginally after the company released its interim report and financial results for the half year ended 31 December 2021.

The RWC share price finished the day less than 1% in the green at $5.13 following the release of its earnings results today.

RWC share price flat amid earnings growth

Key takeouts from the company’s earnings results include:

• 12% growth in reported Net Sales to US$522 million over the prior corresponding period (pcp)
• Americas growth of 15% over pcp including an initial contribution from EZ-FLO which was acquired in November 2021
• Asia Pacific constant currency sales up 10% on pcp driven by strong Australian residential construction and remodel activity
• Continental Europe sales up strongly, while the UK saw lower volumes following a strong period of growth in the pcp
• Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of US$125.5 million, up 5% on pcp
• Adjusted net profit after tax (NPAT) of US$75.4 million, up 5% on pcp

What else happened this period for RWC?

The company’s performance this half was hallmarked by NPAT of US$63.7 million for the six months whereas Adjusted NPAT spiked 5%, up to US$75.4 million.

The result enabled RWC’s board to declare an interim dividend of US4.5 cents per share, slightly down on previous payments in 2021.

However, RWC wasn’t immune to the impacts that global supply chain pressures had on commodity prices in 2021. Rising costs for materials like copper, resins, and steel, were experienced during the period “together with higher costs for freight, packaging, energy and other costs”.

Whilst the company attempted to pass the costs onto consumers versus absorbing it themselves, it remains to be seen whether RWC has the pricing power in its segment to pull this off successfully.

“Price rises were implemented during the period to substantially offset these increased costs, although the timing lag between higher input costs being incurred and offsetting price increases negatively impacted operating margins”, it remarked.

In good news, the period included the first contribution from EZ-FLO, which was acquired back in November 2021. The segment contributed sales of US$22.5 million and EBITDA of US$2.3 million recorded for the 6-week period post-acquisition, RWC says.

Management commentary

Speaking on the announcement, RWC Chief Executive Officer Heath Sharp said:

We continued to experience robust market conditions and demand for our products. The trend of increased spending on home remodelling activity, coupled with strong new residential construction markets, has underpinned record levels of demand. We were able to consolidate our volumes following a period of exceptional growth in 2021. Importantly, we were able to meet our customer’s service and delivery expectations despite the increased incidence of COVID and supply chain challenges.

What’s next for RWC?

So far, this year to date, trends have been “broadly consistent with the trends seen in the first half”, the company said, although results have been mixed.

“Americas sales, excluding EZ-FLO, were higher than the same month last year reflecting ongoing strong demand and performance ahead of market. APAC external sales continued to benefit from ongoing strength in the residential construction and remodelling markets in Australia”, it said.

“Europe, Middle East and Africa (EMEA) also continued the trajectory of the first half with the overall result in line with the prior January”.

RWC share price snapshot

In the last 12 months, the RWC share price has climbed 8% but has struggled since trading recommenced on January 4. Since then it has collapsed over 18%.

The post ‘Record demand’ not enough to lift RWC (ASX:RWC) share price on Monday 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. owns and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Event Hospitality and Entertainment Ltd (ASX: EVT) closed Monday in the green after the company released its interim report and financial results for the half year ended 31 December 2021.

The EVT share price finished Monday 5% higher at $15.30 as investors bought in following the release of its earnings results.

EVT share price lunges higher amid earnings growth

Key takeouts from the company’s earnings results include:

• Group normalised revenue was $438 million, up $155.1 million or 54.8% on the previous year
• Normalised EBITDA was $64.1 million, up $95.1 million on the prior comparable half year
• Statutory profit after tax was $33.3 million, a $93.6 million improvement on the prior comparable half year reported loss.
• Divestments in non-core assets on-track: $194.4 million to date, with gross proceeds to date exceeded most recent valuations by 35.1%.
• Divestments and improved trading performance reduced net debt to $292.3 million at 31 December 2021, consistent with pre-COVID-19 levels.

What else happened this half for EVT?

The company noted that it faced “materially tougher government mandated restrictions than [the] prior comparable period”, like all businesses in Australia during 1H FY22.

Nevertheless, group revenue can in almost 55% higher year on year at $438 million, although that figure reduces to just 35% when backing out the German Government’s Bridging Aid III support the company received.

EVT also said its entertainment businesses benefited from |pent-up demand for the cinema experience and strong performance of key blockbuster films Spider-Man: No Way Home and No Time to Die.

EVT owns the largest cinema circuits in Australia, New Zealand and Germany under the brands Event Cinemas, Greater Union, Moonlight Cinemas and CineStar just to name a few.

And weren’t the group’s growth initiatives on fully display this half as well, particularly through add-on sales generated from its ‘Cinema of the Future’ agenda.

“Implementation of the Cinema of the Future strategies to leverage this demand resulted in customers spending
more each visit and generated a higher profit per customer on a like film basis”, it said.

Aside from this, the group says it continued to make good progress on the divestment strategy with sales in the half year realising gross proceeds of $107.9 million. Cumulatively, the company has now generated gross proceeds of $194.4 million, “exceeding the most recent valuations by 35.1%”.

Management commentary

Speaking on the announcement, EVT CEO Jane Hastings said:

In this half year period, the Group navigated materially greater government lockdowns and restrictions than the prior comparable period. Despite this, the transformation strategies and actions we have completed over the past few years, ensured we are agile and able to respond to the ever-changing landscape. This is evident in the revenue growth and EBITDA turnaround for the Group in this period, which included $75 million of active cost management. Our new business models are already delivering evidence of improved margins which we expect to continue post the pandemic. We have a strong balance sheet and Group net debt is down to pre-COVID level. We are in a strong position to navigate current challenges and invest for growth. I am incredibly proud of the entire EVT team and the way everyone continues to innovate and adapt to deliver the best possible results.

What’s next for EVT?

Commenting on the outlook for 2022, Hastings noted that demand for the cinema experience will remain strong when restrictions are lifted. Based on its current pipeline, the company expects box office revenue “to exceed that achieved in the second half of the prior financial year” for H2 FY22.

Signs of recovery for Hotels were evidenced in the December trading period before Omicron, including pleasing growth in the average room rate, and in Australia, corporate travel is expected to gain traction from April. Thredbo’s summer season is tracking relatively in line with the prior summer season. Overall, our underlying Group EBITDA in the second half last year was approximately $15 million excluding the German Government’s November and December 2020 aid program, and we expect underlying Group EBITDA in the second half this year to demonstrate a strong improvement on that result, subject to no further government trading restrictions.

EVT share price snapshot

In the last 12 months, the EVT share price has climbed 47% after spiking another 3% this year to date. In the past month, it has also soared almost 10% and is in the green across all time frames.

The post Strong rebound sees EVT (ASX:EVT) share price lunge 5% higher on Monday 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 Bruce Jackson.

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The RPMGlobal Holdings Ltd (ASX: RUL) share price is hovering in positive territory so far this week.

While the All Ordinaries (ASX: XAO) gained just 0.06% on Monday, sitting at 7,507 points, RPMGlobal shares managed to leap 2.22% to close the day at $1.84.

This follows the release of the mining software company’s first-half results for the 2022 financial year.

Let’s take a look at what RPMGlobal reported for the front end of FY22.

RPMGlobal share price advances after booking growth across key metrics 

The RPMGlobal share price pushed higher on the back of the company’s latest results.

For the 6 months ending 31 December 2021, RPMGlobal achieved growth despite COVID-19 impacting the business. Here are some of the key highlights:

• Total group revenue of $40.5 million, up 12% on the prior six-month period (H2 FY21)
• Underlying operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.9 million, up 457% on H2 FY21
• Net profit of $1.9 million, up $8.3 million on H2 FY21
• No interim dividend declared for the first half.

What happened in H1 FY22 for RPMGlobal?

RPMGlobal experienced a strong first-half operating performance, driven by an increase in software revenue and advisory revenue. The segments delivered earnings of $27.8 million, up 23.6%, and $12.7 million, up 64.9%, respectively on the prior year.

Operating expenses came to $34.2 million for the first half due to the acquisition of two Environmental and Social Governance businesses. These were Nitro Solutions and Blueprint Environmental Strategies, for which RPMGlobal paid a total of $3.9 million in completion payments.

The group has been focusing on moving its software solutions into the cloud which resulted in higher development costs.

At the end of the period, RPMGlobal recorded net assets of $65.8 million, including cash of $32.4 million and no debt.

What’s the outlook for RPMGlobal?

Looking ahead, RPMGlobal believes operations will return to normal settings by July following the gradual reopening of borders.

The company estimates that a lift in software sales will materialise once mining countries are open for business.

Management noted that selling complex software solutions to global companies is best done in person rather than online.

The company’s ESG division is expected to continue performing in the second half, heavily contributing to revenue in the advisory segment.

While the company maintains a positive outlook, given the unpredictable nature of the pandemic, RPMGlobal refrained from providing FY22 full-year earnings guidance.

The post Why the RPMGlobal (ASX:RUL) share price is edging higher this week appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended RPMGlobal Holdings. The Motley Fool Australia has recommended RPMGlobal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Noxopharm Ltd (ASX: NOX) closed the day in the red after the company released its interim report and financial results for the half year ended 31 December 2021.

The Noxopharm share price finished the day 5% down at 38 cents as investors responded poorly to the release of its earnings results today.

Noxopharm share price as clinical trials progress

Key takeouts from the company’s earnings results today include:

• Strong cash position of A$22.6m due to continued judicious expenditure in the best interest of the company and its shareholders
• This amount includes $5.9 million R&D tax incentive for FY21 received in January 2022, considered non-dilutive funding for the company
• Increased investment in R&D of $8.3m compared to $3.0 million in 1HFY20 to advance the clinical trial programs
• DARRT Program Phase 2 clinical trial (Veyonda with low-dose radiotherapy received IND approval from the FDA

What else happened this half for Noxopharm?

The company’s progress was hallmarked by clinical trial and drug discovery momentum, particularly as R&D expenditure increased by over $5 million to support these programs.

Noxopharm says that its clinical trial sites “include some of the leading cancer centres in the world, notably, the US number one cancer hospital, the MD Anderson Cancer Center…as well as the Beverly Hills Cancer Center and the City of Hope Cancer Center”.

During the half, Noxopharm’s DARRT Program Phase 2 clinical trial, investigating Veyonda with low-dose radiotherapy, received investigational new drug (IND) approval from the Federal Drug Administration (FDA).

As such, the company says the trial is underway at two leading U.S. cancer centres – the MD Anderson Cancer Center and the Beverly Hills Cancer Centre. The patient cohort has already completed first dosages and completed the safety assessments, so updates should be on the way later this year.

Not only that, but Noxopharm made progress on the IONIC Phase 1 trial it is conducting with Bristol Myers during the half. The trial is investigating Veyonda with the Bristol Myers Squibb checkpoint inhibitor, nivolumab, that sells under the brand name Opdivo.

Patients have already been enrolled and treated at the first clinical site the company says, and more sites are expected to open in H1 2022.

Management commentary

Speaking on the announcement, incoming CEO of Noxopharm, Dr Gisela Mautner said:

As incoming CEO, it is pleasing to report that Noxopharm is in a strong cash position with a number of promising programs underway. Our Clinical Portfolio, investigating the combination of Veyonda® with established cancer treatments, is tracking to plan. It is also important to note the relationships we have secured with national and international partners such as Hudson Institute of Medical Research and the US National Cancer Institute, as well
as several prestigious clinical study sites in the USA.

What’s next for Noxopharm?

The company will endeavour to progress in its clinical trial and drug discovery programmes as outlined in its earnings report on Monday.

Noxopharm did not provide any specific earnings or cost guidance for the remainder of FY22.

Noxopharm share price summary

In the last 12 months, the Noxopharm share price has plunged 52% and sits 3% in the red since we started trading in 2022.

Over the previous month, shares have faltered another 9% and are down 9% this past week too.

The post Clinical trials not enough to stop Noxopharm (ASX:NOX) shares’ 5% plunge on Monday 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 Bruce Jackson.

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The Coles Group Ltd (ASX: COL) share price will be on watch this morning.

This follows the release of the supermarket giant’s half year results.

Coles share price on watch after earnings decline

• Revenue up 1% to $20,785 million
• Earnings before interest and tax (EBIT) down 4.4% to $975 million
• Profit after tax down 2% to $549 million
• Fully franked interim dividend flat at 33 cents per share

What happened during the first half?

For the six months ended 31 December, Coles reported a 1% increase in revenue to $20,785 million. Management advised that this reflects elevated sales as a result of lockdowns across New South Wales, the Australian Capital Territory and Victoria, as well as a strong Christmas trade period in the Supermarkets and Liquor segments.

It is also worth highlighting that this sales growth was delivered despite Coles cycling significantly elevated COVID-19 related sales in the prior corresponding period.

Things weren’t quite as positive for its earnings. Coles reported a 4.4% decline in EBIT to $975 million for the half. This was caused by higher COVID-19 disruption costs, related travel restrictions on Express’ earnings, and transformation project costs.

In respect to COVID-19 costs, Coles estimates that a total of $150 million of COVID costs were incurred during the period. This is up from $105 million in the prior corresponding period.

In addition, approximately $20 million of implementation operating costs attributable to the Witron and Ocado transformation projects were incurred. Though, Smarter Selling benefits in excess of $100 million were delivered during the period.

Overall, this EBIT result appears to have fallen a touch short of expectations. For example, the team at Morgans was forecasting a 3% reduction in EBIT to $988 million.

Segment performance

In respect to its segments, the Supermarkets segment reported a 1.1% increase in sales to $18,016 million and a 0.8% reduction in EBIT to $896 million.

Whereas the Liquor segment reported a 2.7% lift in sales to $1,999 million and a 4.8% reduction in EBIT to $99 million, and the Express segment posted an 8.5% decline in sales to $578 million and a sizeable 62.5% reduction in EBIT to $12 million.

The latter was impacted by lower fuel volumes due to restrictions on movements during COVID lockdowns.

Outlook

No guidance has been given for the second half but management has provided an update on current trading conditions.

It said: “As Omicron spread through the community in the early part of January, Supermarkets sales were elevated before moderating later in the month. There has been significant variation in sales performance between states, store locations and on a week-to-week basis as a result of COVID-19 and floods in South Australia which have had an impact on sales, particularly in Western Australia. Coles will continue to focus on providing trusted value for customers, including through Exclusive to Coles products, despite increasing cost pressures.”

“While the current operating environment remains uncertain, COVID-19 costs of approximately $30 million were incurred in January, primarily due to the large number of COVID-19 related isolations, which have now moderated in February,” it added.

The post Coles (ASX:COL) share price on watch after COVID costs hit earnings 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 owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is the Webjet Limited (ASX: WEB) share price a candidate to take off in 2022?

Well, it already has surged in the last few weeks. Since 27 January 2022, the Webjet share price has jumped 29%.

What is driving the Webjet share price higher?

It was announced on 7 February 2022 that Australia would reopen to all fully vaccinated visa holders, welcoming the return of tourists, business travellers and other visitors from 21 February 2022. That was yesterday.

Visa holders who are not fully vaccinated will still require a valid travel exemption to enter Australia, and will be subject to state and territory quarantine requirements.

Webjet has long said that closed borders cause a significant impact on profit.

A few months ago, Webjet said that demand was already “snapping back” and that there was a rapid return to high booking volumes as borders reopened. WebBeds was profitable since July, whilst the Webjet online travel agency (OTA) returned to profitability in October 2021.

What does the outlook look like?

The ASX travel share is intent on capitalising on the travel recovery. Management believe that its geographic diversification has become a core strength as different regions recover at different times and the market opportunity has increased for all businesses.

WebBeds – the business to business (B2B) segment – was seeing November total transaction value (TTV) tracking at 63% of pre-COVID sales yet many key markets were still to open. It’s not the same business as it was pre-COVID, it has expanded its geographic presence in the North American market, added significant domestic inventory globally and signed a range of new customers.

WebBeds is on track to be 20% more cost efficient when at scale, which will come with a targeted earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 62.5%. This could be supportive for the Webjet share price.

Webjet OTA is also “positioned well for growth” with bookings picking up and the opportunity to capture market share.

The Webjet boss John Guscic said:

The opportunities are significant with pent-up demand evident globally as we see travel snapping back as markets open. Our reduced cost base, enhanced technology and strong customer service ethos, in conjunction with a culture of constant product innovation, places us in a powerful position to capture bookings as the recovery continues. Our strong capital base also ensures we can take advantage of strategic opportunities as they arise in a realigned and changing global industry.

For example, it recently announced a US$10 million strategic investment in ROOMDEX, a US-based leader in automated hotel upselling solutions. Webjet has secured a 49% stake with a future option to acquire the remaining 51%. WebBeds plans to offer ROOMDEX products to maximise hotel partners’ revenue from every room sold.

Broker opinions on the Webjet share price

Morgans rates Webjet as a buy, with a price target of $6.60. That’s a potential double digit upside this year.

Ord Minnett is even more positive on the business, with a buy rating and a price target of $7.31. That’s upside of more than 20%.

The post Is the Webjet (ASX:WEB) share price about to fly higher? 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 Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Ooh!Media Ltd (ASX: OML) shares jumped 5.15% into the green on Monday after the company announced its financial results for the full year ended 31 December 2021.

The Ooh!Media share price finished the day up at $1.735 as investors responded positively to the company’s earnings results.

Ooh!Media share price jumps on home audience rebound

Key takeouts from the company’s earnings results included:

• Revenue up 18% to $503.7 million – strong revenue recovery across key formats
• Revenue in Road for November and December 2021 at record monthly levels
• Gross margin of 44.1%, (up 1.8 points) – “strong recovery towards pre-COVID levels”
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 24% to $77.6 million, with margin expansion leveraging revenue growth
• Underlying net profit after tax (NPAT) of $12.7 million compared to a loss of $8.5 million in prior year
• Financial position strengthened further – gearing ratio down to 0.8 times (from 1.8 times CY20) and net debt reduced by 43% compared to 31 December 2020
• Net profit after tax (NPAT) (pre AASB16) of $800,000 compared to a loss of $24.3 million in the prior year
• Reported loss after tax (post AASB16) of $10.3 million compared to a loss of $36.2 million in prior year.

What else happened this period for Ooh!Media?

According to the company, it “successfully leveraged the continuing recovery in Out of Home audiences during the year to deliver an 18% year-on-year lift in revenue to $504 million”.

Apparently, the diversity of Ooh!Media’s assets across a range of out of home formats “ensured it was able to deliver this revenue uplift despite substantial lockdowns in Q3 CY21 and early Q4 and some formats (Fly, Office, Rail) continuing to be impacted by the pandemic”.

Not only that, the company maintained significant operating leverage that enabled it to grow earnings and operating income faster than revenue. In other words, each change in sales translated into a higher change in earnings for the company this half.

As such, this resulted in a 24% increase in underlying EBITDA “despite lower rent abatements and no government wage subsidies in CY21 compared to CY20”.

Ooh!Media is also set to start rewarding shareholders via a newly-reinstated dividend.

“As a result of oOh!’s strong financial position, the Company will recommence dividends to shareholders for CY21” the company remarked.

Management commentary

Speaking on the announcement, Ooh!Media chief executive officer, Cathy O’Connor, said:

oOh! successfully leveraged Out of Home audience growth to deliver a much improved financial result. The strong result is a testament to our strategy. As the market leader across Australia/New Zealand, we are uniquely positioned to capitalise on the audience recovery in Out of Home. Our scale and diversity across a number of formats means we are also able to deliver this growth despite some formats such as Fly, Office and Rail continuing to be impacted by the pandemic. Meanwhile, our strong operating leverage means we continue to grow earnings faster than revenue which has enabled the Company to return to profitability this year on a pre AASB16 basis and recommence dividends to shareholders. We are also generating further momentum into FY22 with a solid start to the year. First quarter revenue is pacing 15% ahead of the prior corresponding quarter and at 93% of the first quarter 2019. For the medium term, the fundamentals for Out of Home as a growth advertising medium remain compelling. This will only be enhanced by further significant digital investment opportunities across key formats.

What’s next for Ooh!Media?

According to the company, it has started the new financial year well and “revenue for the first quarter CY22 is pacing at 15% higher than Q1 2021 and at 93% of Q1 2019”.

It also noted that it remains prioritised on revenue growth and putting its capital to work in order to generate cash returns for the company.

“While the impact of the Omicron variant on overall demand for advertising media has been limited, there has been a pronounced impact on audience environments which have seen substantially less foot traffic than pre-COVID such as Offices and Airports Capital expenditure for the full year is expected to be between $45 million and $55 million and remains focused on revenue growth opportunities and concession renewals”, it concluded.

Ooh!Media share price snapshot

In the past 6 months, the Ooh!Media share price has gained 19.66%. The past year, however, has seen the company’s shares rise by just 2.06%.

The post Earnings boost: Ooh!Media (ASX:OML) share price spikes 5% with audience rebound 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 recommended oOh!Media Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price has been drifting lower in recent weeks.

Since 11 February 2022, Fortescue shares have dropped by 14%.

The iron ore price has seen a decline as well. According to Commsec the iron ore price has fallen to US$133.5 per tonne. It wasn’t long ago that it was above US$150 per tonne.

What’s the cause? Market commentators might suggest it’s because of Chinese influence. The Australian Financial Review reported that “China’s state planner and the market regulator told some iron ore traders to release excess inventory and reduce stocks to reasonable levels following a joint investigation in Qingdao, one of the country’s largest iron ore ports.”

China is the key buyer of iron ore, so what the Chinese do can have a significant impact on demand and prices. This can also have a flow-on effect on the Fortescue share price.

Fortescue also recently reported its FY22 half-year result for the six months to 31 December 2021.

HY22 result

Fortescue revealed that its revenue fell by 13% to $8.13 billion and net profit after tax (NPAT) dropped 32% to $2.78 billion.

The decline in profit led to a 41% reduction of the dividend to $0.86 per share. There was also a reduction of the Fortescue dividend payout ratio to 70% from 80%.

Another element of the profitability reduction was that the discount paid for Fortescue’s lower grade iron ore is increasing. In the half-year period it was a 70% realisation of the average Platts 62% CFR Index, down from 90% in the prior corresponding period.

Indeed, brokers like Credit Suisse have made reference to the fact that they expect the discount to widen which will be detrimental for Fortescue’s iron and hurt profitability.

Fortescue’s higher grade solution

The ASX miner has been looking at some other projects that could increase the grade of iron ore produced. This could support the profit and the Fortescue share price.

The broker UBS says that completing the Iron Bridge project is important. It’s expected to deliver its first production in December 2022. It will deliver 22mt per annum of high-grade 67% Fe magnetite concentrate product.

Fortescue also said that the innovative process design, including the use of a dry crushing and grinding circuit, will deliver globally competitive capital intensity and operating costs.

Regarding concerns about WA’s closed borders limiting access to specialist skills required, the state’s long-term border will come down in early March 2022.

It has entered into an agreement with the Government of the Republic of Gabon to develop the Belinga Iron Ore Project in the country, which is in West Africa. It’s a 36-month exclusivity period. There will initially be exploration works to determine the potential size and grade of the deposit, as well as logistics solutions.

The Gabon Minister for petroleum, gas, hydrocarbons and mines said that the Belinga deposit is one of the world’s largest high-grade iron deposits.

Fortescue has also signed a binding memorandum of understanding to complete an assessment of Sinosteel’s Midwest Magnetite Project, with the assessment to include a rail and port development at Oakajee.

Fortescue share price snapshot

Whilst the company has seen a drop since mid-February, it is still up 40% since the end of October 2021 with the iron ore price going through a recovery.

However, currently, both Credit Suisse and UBS rate it as a sell with price targets of $16.30 and $14 respectively.

The post Why new iron projects could drive the Fortescue (ASX:FMG) share price higher appeared first on The Motley Fool Australia.

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• Dividends down, Fortescue (ASX:FMG) Future Industries spending up. Here’s the miner’s justification

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. 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 Bruce Jackson.

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