The LiveTiles Ltd (ASX: LVT) share price is down 12% on Thursday as the software and technology company reported its FY21 earnings.

Let’s investigate further.

LiveTiles share price on watch after strong revenue and EBITDA growth

• Total revenue growth of 5% year on year to $46.7 million.
• Operating revenue increased by 19% to $45 million
• Underlying EBITDA grew by $11.4 million, or 91%, to a loss of $1.1 million
• Total contracted licenses growth of 48% year on year to 2.3 million
• Mobile licences up 1,211% over the year prior
• Cash receipts expanded by 26% to $51.8 million, with net operating outflows improving by 71%

What happened in FY21 for LiveTiles?

In a potential positive for the LiveTiles share price, the company grew total revenue and operating revenue by 5% and 19% respectively year on year.

LiveTiles explained this comes from growth “across both new and existing customers via upsell and product loss sells”. Its software subscription business also saw 19% growth and software sales revenue was also up 20% on the year prior.

As such, gross profit climbed 16% to around $33 million in FY21 although the company’s gross margin decreased by 16 basis points to 73%. LiveTiles said this was due to “platform maintenance resources and higher licensing costs”, alongside increasing its customer support.

Underlying EBITDA saw an $11.4 million improvement and grew 91% year over year. This was coupled with operating expenditure of $41 million that was a saving of 22% or $11.4 million on FY22.

Consequently, the company’s net profit after tax (NPAT) also improved by about $1.5 million to a statutory loss of $30.1 million.

LiveTiles also recorded its highest ever cash receipts of $51.8 million which is 26% higher year on year. The company explained the result means cash receipts have grown at a compound annual growth rate (CAGR) of 96% over the last 3 years.

Finally, the company left the year with $16.8 million in cash on its balance sheet, which it says is sufficient “to manage ongoing operations with growing cash receipts and disciplined cost management”.

What did management say?

LiveTiles Co-Founder and CEO Karl Redenbach said:

We are pleased with LiveTiles FY21 results in a year that was not without its challenges; operationally, and on a global scale due to the ongoing uncertainty with COVID-19. Despite this, we have continued to make significant improvements across the business during the year, growing our contracted licence base +48% to 2.3m, delivering 19% growth in operating revenues to $45m, reducing our operating expenditures and have now put the company
on a path to profitability with Underlying EBITDA at $(1.1)m, a 91% improvement from 2020.

Regarding LiveTiles’ strategic review, Redenbach added:

During FY21, the Company commissioned an independent Strategic Review, which was presented to the Board in Q4, and we are pleased to be able to share the review findings; as well as the new Company Strategy, the LiveTiles “Premiership Plan”. A detailed outline of the review and the strategic plan is provided in the Director’s Report of the Appendix 4E 2021 Financial Statement.

What’s next for LiveTiles?

Due to uncertainties surrounding the COVID-19 pandemic, LiveTiles opted against providing guidance for FY22.

The company did “reiterate its continued focus on disciplined cost management strategies” amid other measures.

These measures include “reshaping the go-to-market model” whilst reviewing the company’s product portfolio.

In addition, LiveTiles also expects “strong medium to long-term growth potential” which, it states, is driven by “increased remote working and the employee experience solutions” post-pandemic.

At the time of writing, the LiveTiles shares are trading at 15 cents, down 11.76%. The LiveTiles share price has faced challenges this year to date, posting a loss of 29% since January 1. This extends the previous 12 months’ slip of 26%.

Both of these results are well behind the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post LiveTiles (ASX:LVT) share price plunges as EBITDA grows 91% in FY21 appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES FPO. 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 Air New Zealand Limited (ASX: AIZ) share price is in the red in early trade as the Kiwi airline reported a 48% drop in full-year operating revenue.

Air New Zealand share price slips on weak operating revenue

Shares in the Kiwi airline are on the move after the company reported its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

• Operating revenue down 48% on the prior corresponding period (pcp) to $2.5 billion
• Net loss after tax of $411 million, a decrease of 34.6% from FY20’s $628 million loss
• Operating cash flow up 40.4% to $323 million
• No interim dividend.

The Air New Zealand share price has fallen more than 1% at the open following this morning’s result.

What happened in FY21 for Air New Zealand?

Unsurprisingly, COVID-19 was the name of the game in 2021. Ongoing border restrictions impacted on revenues with Air New Zealand reporting that international revenues reduced by 55% compared to FY20.

Cargo flying revenue jumped by 71% thanks to airfreight support schemes in an otherwise disrupted year. The financial result included $450 million of government assistance throughout the year as well further one-off subsidies and initiatives.

The Air New Zealand share price has managed to climb 16.1% higher in the past 12 months despite a year of significantly disrupted operations. That includes an inability to fly two-thirds of the airline’s passenger network due to restrictions.

What did management say?

Air New Zealand chair Dame Therese Walsh had the following to say about the result:

In a severely, constrained environment, Air New Zealand maintained cost discipline, focusing on delivering with excellence in areas in its control.

The return of a strong domestic business and growth in the cargo services that underpin our key export markets was a reminder of the airline’s crucial role in New Zealand’s infrastructure.

Air New Zealand CEO Greg Foran added:

Our people developed new capabilities and dexterity, adapting quickly when conditions changed. Although the return of long-haul travel seems some time away, the changes the team made this year will serve us well when it returns.

We have reimagined our domestic business, increasing the choice of flight times and introducing greater price differentiation for peak and off-peak flying. This allows us to offer more lower priced fares, which will unlock new demand for domestic tourism.

What’s next for Air New Zealand and its share price?

Air New Zealand has deferred its planned capital raise from 30 September until the first quarter of calendar year 2022. The Kiwi airline also suspended 2022 earnings guidance citing the ongoing uncertainty with travel restrictions.

The Air New Zealand share price has slumped 12.7% lower in 2021 amid persistent headwinds for the Trans-Tasman travel industry.

The post Air New Zealand (ASX:AIZ) share price slips as revenue falls 48% appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall 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 A2 Milk Company Ltd (ASX: A2M) share price is out of form again on Thursday.

In morning trade, the struggling infant formula company’s shares are down 10% to $6.17.

This means the A2 Milk share price is now down 66% over the last 12 months.

Why is the A2 Milk share price crashing lower again?

Investors have been selling down the A2 Milk share price following the release of a disappointing full year result and weak outlook for FY 2022.

For the 12 months ended 30 June, the company reported a 30% decline in revenue to NZ$1.21 billion and a 77.6% reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$123 million.

This was in line with the very low end of its final downgraded guidance for FY 2021.

What else is weighing on its shares?

Also weighing heavily on the A2 Milk share price was news that the company won’t be returning any of its sizeable cash balance of NZ$875.2 million to shareholders.

Earlier this year, the company revealed that it was considering a capital return. However, this morning it advised that the Board has instead decided to preserve balance sheet strength, having regard to market volatility and potential opportunities to reinvest in growth and supply chain.

Also causing some alarms to sound was the company revealing that it is reviewing its growth strategy in response to a rapidly changing China infant formula market and structural factors in the daigou channel.

A2 Milk’s Managing Director and CEO, David Bortolussi, commented: “We recognise that the China market and channel structure is changing rapidly and we are undertaking a comprehensive process to review our growth strategy and executional plans to respond to this new environment.”

Outlook

Finally, perhaps the biggest drag on the A2 Milk share price was management advising that the tough times may not be over any time soon.

Mr Bortolussi explained: “Overall, although a2MC believes the business will continue to make significant progress on many fronts, FY22 is expected to continue to be a challenging and volatile year. Due to the actions taken in 4Q21 to address channel inventory and improve product freshness, coupled with strong brand health, the business is well-placed to adapt its strategy and execution to drive growth in the longer term. However, recovery in English label channels is expected to be slow and market growth in China will be subdued for some time.”

The post A2 Milk (ASX:A2M) share price crashes 10% on disappointing FY22 outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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 IOOF Holdings Limited (ASX: IFL) share price is climbing in early trade after the wealth manager’s latest full-year results.

IOOF share price on watch as profit jumps 19%

Some of the key takeaways from the IOOF result include:

• Revenue up 31% on the prior corresponding period (pcp) to $770 million
• Group funds under management, advice and administration (FUMA) of $453 billion including 15% organic growth
• Underlying net profit after tax (UNPAT) up 19% on pcp to $147.8 million
• Final franked dividend of 11.5 cents per share, including a 2 cents per share special dividend

The IOOF share price is climbing higher on Thursday following the latest full-year result.

What happened in FY21 for IOOF?

The MLC acquisition was completed in May 2021 and represents a major strategic pillar for IOOF. IOOF reported its synergy run-rate of $12 million per year was achieved by 30 June and remains on track to deliver $80 million to $100 million by the end of FY22.

The company’s Evolve21 migration saw over 38,000 accounts transferred and is on track to complete by December 2021.

IOOF reported net inflows of $1.1 billion into its Portfolio and Estate Administration business with a turnaround in net flows into Investment Management in Q4 2021.

The IOOF share price fell 7.6% lower throughout FY21 despite climbing steadily higher in calendar year 2021.

What did management say?

IOOF CEO, Renato Mota, had the following to say about the full-year result:

This year has been transformational with the successful completion of the MLC acquisition on 31 May.

The increase in our revenue and UNPAT evidences our commitment to growth, both through transformation as well as benefits of recent acquisitions. The MLC acquisition is proceeding well and our integration plans remain on track.

Through the transformation of our business, we expect to deliver synergy benefits during FY22 and beyond.

Longer-term, we continue to see significant opportunities through the expanding addressable market and changing demographies which are increasingly driving demand for our quality financial wellbeing advice, contemporary administration services and expanded investment capabilities.

What’s next for IOOF and its share price?

IOOF outlined some key priorities for the current financial year. These include delivering annualised run-rate synergies of $80 million to $100 million from the MLC acquisition and completing its product and platform review.

The IOOF share price has climbed 43.1% higher in 2021 and is outperforming the S&P/ASX 200 Index (ASX: XJO) by 30.4% this year.

The post IOOF (ASX:IFL) share price jumps as profit surges 19% appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall 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 Damstra Holdings Ltd (ASX: DTC) share price is falling this morning following the Aussie health and safety software company’s latest full-year results.

Damstra share price slumps despite revenue surge

In early trade, the Damstra share price is down more than 5% after the company provided its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

• Revenue up 40% on the prior corresponding period (pcp) to $27.4 million
• Annual recurring revenue (ARR) up 63% on pcp to $34.5 million
• Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) down 3% to $6.6 million
• Cash receipts up 51% on pcp to $31.7 million
• 737,000 users, up 74% from 423,000 in FY20

What happened in FY21 for Damstra?

The Damstra share price has slumped 39% lower over the past 12 months despite a year of headline growth. One significant event was the October 2020 acquisition of Vault Intelligence Ltd (ASX: VLT) for non-cash consideration of $99.3 million.

Damstra increased its ARR, cash receipts and user numbers throughout the year. Other significant achievements for the year include global footprint expansion and new product launches.

Damstra now has 737,000 global users with its products used in more than 20 countries. The Aussie software group also announced several major contracts including with NBN Co. and a trial with a new global mining client.

What did management say?

Damstra CEO Christian Damstra had the following to say about the result:

FY21 has been a transformational year for Damstra, having strategically repositioned our product offering under the Enterprise Projection Platform (EPP) banner, while delivering strong revenue growth and EBITDA performance.

We are pleased to have successfully integrated Vault into the Damstra ecosystem following its acquisition during the year. Signficantly outperforming the targeted operational synergies from the deal has helped us to drive strong operating leverage in the business, resulting in robust EBITDA and margins in FY21.

What’s next for Damstra and its share price?

Damstra is targeting free cash flow breakeven in FY22 based on a higher revenue base and run-rated cash synergies from the Vault acquisition.

The Damstra share price has fallen in early trade, down 4.62% at the time of writing to $1.135. It is also down 25.5% year to date.

The post Damstra (ASX:DTC) share price slumps 5% despite revenue surge appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 and has recommended Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings 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 Link Administration Holdings Ltd (ASX: LNK) share price is sliding in opening trade on Thursday.

This follows the release of the superannuation fund’s FY21 annual financial report earlier this morning.

Just after the market open, the Link share price is down 4.5% trading at $4.91.

Link share price sinks on revenue and net tangible assets drop

Highlights of the company’s FY21 results include:

• Revenue of $1.16 billion down 6% year on year from $1.23 billion
• After tax net loss of $163 million, versus a loss of $102.5 million the year prior
• Operating EBIT down 21% from FY20 at $141 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $208 million, a 16% decrease year on year
• Operating net profit after tax and amortisation (NPATA) of $113 million, down 18% on the previous year
• Fully franked dividend of 5.5 cents per share, paid on 20 October 2021.

What happened in FY21 for Link?

The Link share price is in focus today as the company recognised a 6% drop in its revenue from FY20.

Link also saw headwinds across the park in its FY21 results, with a 21% decrease to earnings before interest and tax (EBIT) and a net loss that blew out to $163 million, compared to $102.5 million a year ago.

As such, EBITDA of $208 million came in 16% behind the same time last year, even though amortisation increased by 11% to about $47 million. Link advised that this came from the “prior year’s acquisitions reaching the end of their useful lives in FY20 and FY21”.

The net loss was underscored by lower operating income and a “higher income tax expense”. Link also recorded an 8% decrease in net operating cash flow to $293 million.

In addition, recurring revenue in its retirement and superannuation solutions business, which accounts for almost 90% of this segment’s sales, was down $4.5 million on the year.

This was compounded by the fact that non-recurring revenue (which makes up the remainder of sales in this part of Link’s business) also came in 10.4% behind FY20.

Link left the quarter with $395 million in cash, an almost 50% gain from the year prior. The company said this was due to the “$200 million of cash proceeds received… as a partial repayment of PEXA shareholder loans” prior to the PEXA initial public offering (IPO) on 1 July 2021.

Under this IPO, Link received $180 million in cash and retained a 42.8% equity interest in PEXA. In addition, PEXA contributed about $33 million to “Link Group’s operating NPATA in FY21”.

In addition, Link declared a 5.5 cents per share dividend in its FY21 annual report. This brings the total dividends for FY21 to 10 cents per share, on par with the previous year.

Finally, the company also started the transition of Vivek Bhatia as the new Group managing director and CEO in FY21.

What did management say?

Link’s new managing director and CEO Vivek Bhatia said:

With the repositioning and resetting of the business underway, Link Group is well placed to return to medium-term growth. The markets we operate in have attractive macro fundamentals and our proprietary technology platforms and experienced people capabilities are supporting an increasing number of large clients.

Moving to FY22, Bhatia said:

Our focus for FY22 is to further our Simplify, Deliver and Grow strategy by progressing the global transformation program and enabling reinvestment in key technology and people initiatives.

This investment, together with continued positive markets and the benefits of the global transformation
program, is expected to underpin an increased growth in revenues and a return to earnings growth in FY23 and beyond.

What’s next for Link Administration?

Link Group expects “low single-digit” revenue growth in FY22 and that operating EBIT will be “broadly in line” with FY21.

The company also expects to achieve $75 million in gross annualised savings from the completion of its global transformation program next year.

Moving beyond FY22, the group expects to “deliver stronger revenue growth” in FY23 versus the year prior.

Growth in operating EBIT is expected to resume in FY23 as the company completes this global transformation program.

The Link Administration share price has had a choppy year to date, posting a loss of 7.2% since January 1. Despite this, Link shares are up 17% over the last 12 months.

These returns have both lagged the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post Link (ASX:LNK) share price down as revenue slides 6% in FY21 appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings 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 Appen Ltd (ASX: APX) share price has dropped by more than 17% in early trading on Thursday.

This follows the annotated dataset provider releasing its FY21 first-half results this morning.

Appen share price slides after reporting steep earnings fall

• Group revenue down 2% to US$196.6 million
• Annual contract value increased 16% to US$119.6 million
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) down 14.3% to US$27.7 million
• Interim dividend of AUD4.5 cents per share 50% franked declared, flat on 1H20 dividend.
• Net profit after tax down 55.1% to US$6.7 million
• Appen to acquire location data provider Quandrant for US$25 million upfront
• Outlook: higher confidence in the pipeline supported by a stronger order book

What happened in FY21 for Appen

Investors seem to be squeamish this morning after the company dished out its half-year result.

The significant reduction in profits will no doubt be a point of interest for shareholders as Appen continues to navigate a challenging environment. In addition to this, ongoing regulatory scrutiny and a changing privacy landscape were mentioned as impactful factors.

According to its release, Appen recorded group revenue of US$196.6 million in 1H21 — representing a 2% reduction compared to 1H20. The company noted this was expected with its project delivery skewed to the second half of the year.

Additionally, global services revenue was impacted during the period as global customers allocated resources to new and non-advertising related projects.

However, Appen reported further growth from its new markets revenue segment. In 1H21, new markets revenue jumped 31.5% to US$47.8 million as the business pushes forward with its new ‘product led’ approach. As a result, new markets now make up 24% of total revenue.

Moving towards the bottom line, underlying profits were down 35% following the realisation of increased amortisation expenses associated with investment in product development.

Despite the weaker earnings result, Appen declared an interim dividend of 4.5 cents per share — in line with the previous year. Based on the current Appen share price, the interim dividend alone presents a yield of 0.32%.

Acquisition

In addition to its half-year result, Appen also announced the acquisition of location data provider Quadrant today. This acquisition is slated to expand the company’s capabilities and product offering in the global location intelligence market.

Quadrant was founded in 2014 and provides location data services to enterprise customers to perform location analytics. Similar to Appen’s core products, Quadrant’s Geolancer provides point-of-interest data that is manually verified by crowdsourced workers.

Moreover, Appen plans to acquire 100% of Quadrant with an upfront cash consideration of US$25 million. An additional US$20 million payment in Appen shares will be conditional on revenue milestones in 2022 and 2023.

What did management say?

With the Appen share price in focus, Appen Chief Executive Officer Mark Brayan said:

As expected, our first half results were impacted by our global technology customers’ focus on new AI products and applications, as they broaden their revenue base outside of digital advertising and respond to data privacy changes. This resulted in lower ad-related services revenue, but higher product revenue as Global customers used our market-leading annotation platform and tools for new AI use cases.

Additionally, regarding the company’s acquisition of Quadrant, Mr Brayan said:

The acquisition of Quadrant enables Appen to increase our addressable market and to expand our product and service offering to our customers to include more mobile location and POI data capabilities.

We already have the broadest AI training data offering in the industry, and we see an opportunity to grow in the mobile location and POI data space. With Quadrant’s Geolancer and our global crowd, we will be strongly positioned to serve our customers’ scale, speed and quality requirements.

What’s next for Appen?

Looking ahead, Appen reduced its full-year underlying EBITDA guidance due to the impact of the Quadrant acquisition. Specifically, the market expansion is expected to reduce its EBITDA range by US$2 million to between US$81 million and US$88 million.

Additionally, year-to-date revenue plus orders in hand for delivery in FY21 is now roughly US$360 million. This represents a 10% increase on the August 2020 guidance.

Overall, Appen anticipates full-year revenue growth for global services to be mid to high single digits. Meanwhile, new markets revenue is expected to be circa 25%.

Appen share price snapshot

It has been a disappointing 12 months for the Appen share price. Over the period, shares in the dataset provider have dropped 68%.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 23%. Multiple downgrades to guidance shifted investor sentiment during the year.

The post Appen (ASX:APX) share price tanks after 55% profit fall appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen 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 Wesfarmers Ltd (ASX: WES) share price has surged 25% higher since the beginning of the year. This comes as the retail conglomerate has experienced improved trading conditions despite COVID-19 challenges.

At Wednesday’s market close, Wesfarmers shares finished the day at $63.22. It’s worth noting its shares reached a new all-time high of $67.20 last week before pulling back.

What happened to Wesfarmers shares last earnings season?

During the time when Wesfarmers reported its half-year results for FY21, its shares plummeted 10% within a matter of days. This came as investors appeared initially concerned about the company’s second-half expectations.

However, the share price quickly rebounded in the following month, with the company touching new all-time highs thereafter.

Looking back at the results, Wesfarmers delivered revenue of $17,774 million, a 16.6% increase over the prior corresponding period. This came on the back of strong earnings from Bunnings, Kmart Group, and its chemicals, energy and fertilisers businesses.

Wesfarmers achieved earnings, before interest and tax (EBIT) of $2,137 million, up 23.2% compared to H1 FY20.

On the bottom line, the group posted a net profit after tax of $1,390 million, a 23.3% improvement.

Wesfarmers’ Managing Director Rob Scott said:

Bunnings, Kmart Group and Officeworks delivered strong trading results for the half, reflecting their ability to adapt to changing customer preferences and provide a safe environment for customers and team members.

In line with Wesfarmers’ objective of delivering superior and sustainable long-term returns, the retail divisions continued to invest in building deeper customer relationships and trust by providing greater value, service and convenience for customers during a period in which many Australian households faced significant challenges and uncertainty.

Is the Wesfarmers share price a buy?

A recent broker note released by Swiss investment firm UBS initiated Wesfarmers shares with a neutral rating at $62.00. Macquarie, on the other hand, raised its price target by 9.2% to $63.45.

Based on the current Wesfarmers share price, this is in line with both broker estimates.

Wesfarmers commands a market capitalisation of roughly $71.6 billion, with more than 1.1 billion shares on its books.

The post The Wesfarmers (ASX:WES) share price fell 10% last time the company reported 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers 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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The Qantas Airways Limited (ASX: QAN) share price is in focus this morning after the company released its earnings for the 2021 financial year (FY21).

The Qantas share price finished yesterday’s session trading at $4.87 after climbing 5.41% for the day.

Qantas share price in focus on massive loss

Investors will be keeping an eye on the Qantas share price when trading resumes on Thursday after the airline released the following key performance results for FY21:

• Statutory loss before tax of $2.35 billion.
• $12 billion revenue impact from the COVID-19 crisis in FY21.
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) was $410 million. That’s in line with Qantas’ guidance.
•  $5.93 billion of revenue.
• Operating cash flows came to an outflow of $386 million.

Qantas’ underlying loss before tax, which didn’t include one-off costs such as redundancies and aircraft write-downs, was $1.83 billion.

Additionally, its statutory loss after tax came to $1.72 billion.

Combined, Qantas and Jetstar’s underlying EBITDA from domestic travel was $304 million. Excluding non-cash depreciation and amortisation, the two airlines’ earnings before interest and tax (EBIT) came to a loss of $669 million.  

Qantas’ international segment, including freight, posted an underlying EBITDA loss of $157 million. When removing non-cash depreciation and amortisation from the equation, its international leg’s EBIT reached a $1 billion loss.

However, due to the trans-Tasman bubble, Qantas’ international capacity reached around 40% of its pre-COVID-19 levels in the fourth quarter. That was before Greater Sydney entered lockdown.

Qantas received $3.76 billion of revenue from passengers over FY21. It also brought in $1.31 billion from freight services.

Jetstar saw $1.14 billion of revenue and ended the period with an EBIT loss of $129 million.

Qantas Loyalty generated $1 billion of income for the airline. Its underlying EBIT was $272 million.

The airline’s net capital expenditure for FY21 was $693 million, which mostly went towards maintaining its fleet.

Qantas ended the period with $2.2 billion of cash and cash equivalents and $5.9 billion of debt.

What happened in FY21 for Qantas?

Here’s some of what impacted the Qantas share price in FY21:

The capacity of Qantas’ domestic flights fell to as low as 19% in July 2020 and peaked at 92% in May 2021.

In May, demand for corporate travel had increased to 75% of what it was before COVID-19.

Qantas states it saw bookings increasing whenever Australia’s domestic borders reopened.

It also introduced 46 news routes throughout the pandemic.

95% of the group’s domestic flights ended up cash positive and Qantas Freight offset some of its international segment’s losses. Qantas said Australians’ love of online shopping bolstered its bottom line in FY21.

The company’s restructuring program, a part of its recovery program, is ahead of target. It delivered $650 million of cost benefits in its first year.

Qantas has also operated nearly 400 repatriation flights since the start of the pandemic, as well as maintaining links to the Pacific and Timor-Leste on behalf of the Australian Government. These flights are continuing into FY22.

It also put out an expression of interest to sell up to 14 hectares of land in Mascot.

Finally, Qantas Frequent Flyers have helped negate some of the airline’s losses. The loyalty program saw nearly 200,000 new members in FY21. Members also redeemed large numbers of points while grounded. Qantas saw a record number of points go towards Qantas Wine and the Qantas Store. And when borders were open, Frequent Flyers’ demand increased exponentially. Between January and lockdowns in June, redemption levels on domestic flights were 30% above pre-COVID levels.

To help its customers through the pandemic, Qantas extended its Frequent Flyers status expiration dates, offered unlimited date changes on all Qantas domestic and international fares through to at least February 2022, and supported the national COVID-19 vaccine rollout.  

Qantas employee struggles

Over FY21, Qantas employees faced a tough slog of stand-downs.

Qantas states that a total of 9,400 staff members have now left the airline. That’s 900 more than Qantas previously estimated.

Around 6,000 of its employees who normally work on the airlines’ international legs have been stood down, while another 2,500 have been stood down due to domestic restrictions.

The Federal Government has provided all Qantas Australian-based employees who have been stood down with income support.

Of the company’s restructuring program cost-saving initiatives, $297 million came from “people restructuring costs”.

What did management say?

Qantas CEO, Alan Joyce, commented on the results:

This loss shows the impact that a full year of closed international borders and more than 330 days of domestic travel restrictions had on the national carrier. The trading conditions have frankly been diabolical.

It comes on top of the significant loss we reported last year and the travel restrictions we’ve seen in the past few months. By the end of this calendar year, it’s likely COVID will cost us more than $20 billion in revenue…

Despite the uncertainty that’s still in front of us, we’re in a far better position to manage it than this time last year. We’re able to move quickly when borders open and close. We’re a leaner and more efficient organisation. And our requirement for all employees to be vaccinated will create a safer environment for our people and customers.

What’s next for Qantas?

Qantas today released a detailed plan of its pathway back to international travel.

The airline expects Australia to reach key vaccination targets by the end of 2021, resulting in increased domestic demand.

It expects international travel to begin again in December 2021, with destinations having achieved high vaccination rates to be its initial focus. These include North America, the United Kingdom, Singapore, and Japan. Qantas is organising for the return of five A380s to meet the demand to Los Angeles and London from mid-2022.

Flights to New Zealand will be on sale from mid-December. Flights to Hong Kong are expected to restart in February, with the rest of the Qantas and Jetstar international network expected to open from April 2022.

The airline believes it is in a better spot to deal with FY22 than it was at the start of FY21.

Qantas’ COVID recovery plan aims to deliver permanent annual savings of at least $1 billion from FY23.

After delivering $650 million in benefits in FY21, the airline hopes to deliver another $200 million of cost benefits by the end of FY22.

Australia’s current COVID-19 outbreaks are expected to have a $1.4 billion impact on Qantas’ underlying EBITDA for the first half of FY22.

That estimate assumes borders in Victoria and New South Wales will re-open in early December.

Qantas expects its net debt to be in its target range by the end of FY22. Its capacity is expected to increase from 38% of pre-COVID-19 levels in the first quarter of FY22 to 53% in the second, and rise to around 110% in the second half of FY22.

Qantas’ international flights are expected to be at 15% of pre-COVID levels in the first half of FY22. They are expected to be between 30% and 40% by the third quarter, and 50% to 70% in the fourth.  

Qantas share price snapshot

The Qantas share price has slipped 0.8% year to date. However, it is 28% higher than it was this time last year.

The post Qantas (ASX:QAN) share price on watch following $2.35 billion pre-tax loss 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 Bruce Jackson.

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The Ramsay Health Care Limited (ASX: RHC) share price could be on the move today.

This follows the release of the private hospital operator’s full year results.

Ramsay share price on watch after strong profit growth

• Revenue increased 3.9% to $12,435.5 million
• Earnings before interest and tax (EBIT) lifted 29.1% to $1,132.6 million
• Statutory profit jumped 58.1% to $449 million
• Earnings per share up 47.6% to 192.6 cents
• Free cash flow down 14.8% to $852.3 million
• Fully franked final dividend of 103 cents per share, bringing full year dividend to 151.5 cents (up 142% year on year)

What happened in FY 2021 for Ramsay?

For the 12 months ended 30 June, Ramsay reported a 3.9% increase in revenue to $12,435.5 million. This reflects a 7.8% increase in Asia Pacific revenue, a 6.9% lift in European revenue, and a 21.3% reduction in UK revenue. Some of the latter’s decline was offset by revenue from government agreements. This includes payments for the use of its facilities and services to assist with COVID outbreaks. Ramsay also received payments in some regions for the additional costs associated with operating in a COVID environment.

Things were even better for Ramsay’s earnings, which could bode well for the Ramsay share price today. The company reported a 29.1% increase in EBIT to $1,132.6 million thanks to strong earnings growth across all three of its geographic segments. This was broadly in line with the market’s expectations. For example, Goldman Sachs was forecasting EBIT of $1,137.9 million.

Ramsay’s EBIT was driven by Asia-Pacific EBIT increasing 18.9% to $636 million, European EBIT jumping 38.3% to $403.8 million, and UK EBIT surging 83.4% to $92.8 million in FY 2021.

In light of this profit growth and strong balance sheet, the Ramsay Board declared a fully franked final dividend of 103 cents per share. This brings its full year dividend to 151.5 cents, which is up 142% year on year.

What did management say?

Ramsay’s CEO & Managing Director, Craig McNally, commented: “Our FY21 financial report is a solid result given the ongoing disruption to the business caused by the pandemic which saw significant restrictions placed on elective surgery and drove a material reduction in demand for non-surgical services.”

“We have worked closely with governments across our regions to relieve pressure on the public hospital and aged care systems. As all our regions emerged from the lock-downs in 4QFY21 we started to benefit from the pent up demand for private healthcare services and we believe we are in a strong position to assist with addressing the public backlog of elective surgeries moving forward. The recovery in volumes has however been disrupted by further lock-downs. Lifting vaccination rates will be the key to the recovery,” he added.

Mr McNally also spoke a little about the big dividend increase in FY 2021.

He said: “The higher than normal dividend payout ratio this year reflects our strong cashflow and financial position allowing the full year dividend to be restored to the FY19 level. The Board recognises shareholder support during what has been the most challenging 18 months in the Company’s history.”

What’s next for Ramsay in FY 2022?

No guidance has been provided for FY 2022 due to the uncertainty it is facing because of COVID-19.

However, it has provided some details on what to expect in the new financial year. This includes the lockdowns in Australia, which negatively impacted its Australian EBIT by $13 million in July.

Another piece of information that could weigh on the Ramsay share price is the surgical restrictions that came into place this week at seven hospitals in Greater Sydney. By way of reference, the estimated EBIT impact of an approximately 90-day restriction on elective surgeries in Victoria in 2020 was $70 million. However, Ramsay’s business in NSW is approximately twice the size of its Victorian business.

Commenting on the year ahead, Mr McNally said: “Our FY22 results will be largely dictated by the effectiveness of global vaccination programs in reducing the number and severity of COVID cases around the world, reducing COVID hospitalisation rates, improving both doctors and the general publics’ confidence in returning to health care settings and allowing the private hospital sector to operate without capacity restrictions.”

“The UK and European businesses have started FY22 on positive trajectories after emerging from long and restrictive lock-downs, although both businesses continue to be impacted by issues associated with the COVID environment. The Australian and Asian businesses will continue to be impacted by lock-downs in 1HFY22 until vaccination rates progressively improve.”

While the near term will be tough, Ramsay’s CEO is positive on the company’s medium term prospects.

“We remain well positioned for strong growth over the medium term addressing the backlog in demand for healthcare services in both the public and private systems and we will continue to support the public health sector where required in the fight against COVID,” he concluded.

Ramsay share price performance

The Ramsay share price has been a bit of a mixed performer in 2021. Although its shares are up a decent 6.3% year to date, they trail the ASX 200 with its gain of 12.7%.

The post Ramsay (ASX:RHC) share price on watch after strong FY 2021 profit growth but cautious outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care 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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