Netwealth Group Ltd (ASX: NWL) shares are on the slide today following the release of the company’s results for the first half of the 2021 financial year (1H FY21). At the time of writing, the Netwealth share price has slumped 4.25% to $17.14.

Let’s take a look at how the wealth management business has been performing.

Netwealth share price slides despite numerous highlights

The Netwealth share price has failed to ignite today despite the company reporting a record half-year increase to its funds under administration (FUA). 

Netwealth increased its FUA for the half by $7.3 billion, or around 23%, taking its total FUA as at 31 December 2020 to $38.8 billion.

For the 12 months to 31 December 2020, FUA grew to $10.3 billion, a 36.1% increase.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $40.5 million — an increase of 30.1% compared to the prior corresponding period (pcp). 

Netwealth’s earnings per share (EPS) was 11.3 cents.

The company reported total income of $72.4 million, which represents a 23.4% increase on the prior half.

Net profit after tax (NPAT) rang in at $27.6 million, which was 34.5% or $7.1 million higher than the pcp.

The board declared a fully franked interim dividend of 9.06 cents per share totalling $22.1 million for the period. The dividend is payable on 26 March 2021.

Company outlook

Netwealth advised that its pipeline of new business and transitions remains strong.

Based on no adverse changes to the operating environment and subject to the timing of transitions, the company expects its FY21 FUA net inflows to be in the range of $8.5 billion to $9 billion.

Netwealth also expects to benefit from growth in its affluent, high net-worth and private wealth groups.

The company added 25 additional technology infrastructure resources across Australia and Vietnam during 1H FY21. The purpose of these is to build synergies with third-party software solutions providers and to continue enhancing operational efficiency and scalability.

Foolish takeaway

The Netwealth share price has gained more than 100% over the past 12 months. Netwealth shares have surged more than 200% since their March 2020 lows but are still trading around 8% lower than their 52-week high of $18.71.

Based on the current Netwealth share price, the company commands a market capitalisation of around $4.4 billion.

More reading

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• ASX 200 rises 0.8%
• ASX 200 up 0.65%: Zip update impresses, Netwealth rockets, Cleanaway dumped

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Netwealth. 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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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. The benchmark index is currently down 0.5% to 6,880.7 points.

Here’s what has been happening on the market today:

Westpac Q1 update impresses

The Westpac Banking Corp (ASX: WBC) share price is racing higher today. Investors have been buying the banking giant’s shares after its first quarter update impressed. Westpac reported a quarterly cash profit of $1.97 billion for the three months ended 31 December. This was more than double the quarterly average it achieved during the second half of FY 2020. Another big positive was that Westpac has reversed some of its COVID impairments. The bank recorded an impairment benefit of $501 million in the period after the COVID-19 threat receded.

Coles disappoints

The Coles Group Ltd (ASX: COL) share price has come under pressure today following the release of its half year results. While Coles delivered a profit result ahead of expectations, its outlook appears to have spooked investors. CEO Steven Cain warned: “Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22.”

Domino’s delivers

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price hit a record high this morning after investors responded very positively to its first half results. The pizza chain operator delivered a 16.5% increase in total global food sales to $1.84 billion and a 32.3% EBIT jump to $153 million. This was driven by strong same store sales growth and new store openings. Pleasingly, management is confident on the second half. CEO and Managing Director, Don Meij, said the company intends “to significantly outperform this strong result in the Second Half.”

Best and worst ASX 200 performers

The EML Payments Ltd (ASX: EML) share price is the best performer on the ASX 200 today with a 13% gain. This follows the release of its half year results, which revealed strong revenue and profit growth. The worst performer has been the Zip Co Ltd (ASX: Z1P) share price with a 12% decline. This appears to have been driven by profit taking after some incredible gains in recent weeks.

More reading

• Why Domino’s, EML Payments, Redbubble, & Westpac shares are storming higher
• Why the EML Payments (ASX:EML) share price is rocketing 19% higher
• Why the Evolution (ASX:EVN) share price crashed despite record results
• Domino’s (ASX:DMP) share price higher after delivering strong first half growth
• Westpac (ASX:WBC) share price on watch as it delivers $2bn quarterly profit result

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and EML Payments. 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 Aussie Broadband Ltd (ASX: ABB) share price is flying today as the company announced strong half-year results for FY21. Shares in the telecom company are currently trading 8.66% higher, at a price of $2.76.

Established in 2008, Aussie Broadband is an Australian owned and operated telecommunications company based in Victoria. It currently has a market capitalisation of $523 million.

What’s driving the Aussie Broadband share price?

For the half-year ending 31 December 2020, the small-cap Aussie telecom provider saw its revenue increase 89% to $157.4 million. Handily outpacing its prospectus forecasts of an 84.1% increase.

Thanks to the strong increase in revenue, earnings before interest, tax, depreciation and amortisation (EBITDA) also grew strongly to $7.3 million. This is an increase of 87% on the prior corresponding period and again, ahead of forecasts.

What’s more, this number comes in at $8.4 million when IPO expenses are deducted. EBITDA was driven by customer growth, lower marketing expenses, NBN extending customers COVID-19 credits and promotional rebates.

Marketing expenses for the period were $9.7 million, 16% lower than forecast. This was largely a result of the pandemic affecting supply chains. Nonetheless, despite the lower marketing expenses, Aussie Broadband said it exceeded its customer connection targets for the period.

Moreover, the company increased its broadband connections by 31% from June 2020. It had provided 342,634 connections on the NBN and OptiComm networks at the end of the period. As such, Aussie Broadband’s market share increased to 4.2%, compared to 2.85% last term.

Management comments

Commenting on the results, Aussie Broadband managing director Philip Britt said:

In a year with significant disruption to the community and many people and businesses doing it very tough, our team has managed to significantly grow our market share, maintain network performance and further improve our already great customer experience …all during the peak of a pandemic and whilst listing the company on the ASX.

We have continued to build out critical infrastructure for our network that will shape the quality of our service for years to come, and invested heavily in our Australian team and technology capability, including internal software enhancements and network automation.

What now

With the high degree of uncertainty continuing to exist around the marketplace, Aussie broadband noted there was potential for guidance to change.

Nevertheless, Aussie Broadband estimates that revenue for FY21 will be between $345 to $355 million. Well above the $338 million estimated in the company’s prospectus report. Residential broadband is also expected to continue its strong run with the company estimating to have between 380,000-410,000 connections at the end of the financial year.

More reading

• ASX 200 drops 0.3%
• Why the Aussie Broadband (ASX:ABB) share price rocketed 20% higher today
• Why Aussie Broadband, Fisher & Paykel Healthcare, Lynas, & Megaport are charging higher

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Aussie Broadband 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 Bruce Jackson.

The post Aussie Broadband (ASX:ABB) share price surges 8% on record revenue appeared first on The Motley Fool Australia.

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The Super Retail Group Ltd (ASX: SUL) share price opened around 2% higher this morning following the release of the company’s half-year results. 

At the time of writing, the Super Retail Group share price is approximately $11.30 a share, down 2.6%.

Let’s check out the half-year performance and what it might mean for the Super Retail Group share price.

Super Retail share price slumps despite strong half-year results

Super Group Retail reported total group sales of $1.78 billion for 1HFY21. This is a 23% increase from the prior corresponding period (pcp). Online sales soared 87% to $237.4 million.

The company’s group segment earnings before interest, tax, depreciation and amortisation (EBITDA) powered up 95% to $311.4 million. Statutory net profit after tax (NPAT) charged 201% higher to $172.8 million. Underlying NPAT also blasted up 139% reaching $177.1 million.

The Group had no bank debt and a cash position of $416.8 million at the end of the period. The Super Retail Group fully franked interim dividend is 33 cents per share.

Commenting on the performance, Chief Executive Officer and Group Managing Director, Anthony Heraghty said: 

We are pleased with a first half financial performance characterised by robust top-line growth, higher gross margin and strong operating leverage. Our omni-retail capability has been instrumental in enabling the Group to pivot towards shifting consumer spending habits and deliver profitable growth, underpinned by strong digital sales.

The strong operating leverage that the Group has been able to deliver in the first half, during a period of robust online sales growth, clearly reinforces the profitability of our digital sales and the scalability of our omni-retail platform.

Company snapshot

Super Retail Group owns and operates a portfolio of retail brands across Australia. The brands include automotive retailer Supercheap Auto, outdoor and leisure retailers Macpac BCF, and sporting retailer Rebel Sport.

The Group fulfilled over 2 million online orders during the first half and increased the membership of its online loyalty club by adding 700,000 more members than in the pcp.

Over the past 12 months, the Super Retail Group share price has gained roughly 29%.

More reading

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• 2 ASX dividend shares with yields above 4.5%

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak. The benchmark index is currently down 0.6% to 6,875 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is up 4% to $101.39. This follows the release of the pizza chain operator’s first half results this morning. For the six months ended 31 December, Domino’s delivered a 16.5% increase in total global food sales to $1.84 billion. Thanks to margin expansion, the company’s EBIT grew at the even quicker rate of 32.3% to $153 million. Domino’s CEO and Managing Director, Don Meij, said the company intends “to significantly outperform this strong result in the Second Half.”

EML Payments Ltd (ASX: EML)

The EML Payments share price has jumped 13% to $4.77. Investors have been buying the payments company’s shares following the release of its half year results. EML Payments reported a 54% increase in group gross debit volume to $10.2 billion and a 61% jump in revenue to $95.3 million. And while changes in its sales mix weighed on margins, net profit after tax before amortisation still came in 30% higher at $13.2 million. Management reinstated its guidance and is predicting strong full year growth.

Redbubble Ltd (ASX: RBL)

The Redbubble share price is up 4% to $5.91. Investors have been buying the ecommerce company’s shares following a selloff on Tuesday. Analysts at Goldman Sachs believe the weakness in the Redbubble share price is a buying opportunity and have put a buy rating and $7.15 price target on its shares.

Westpac Banking Corp (ASX: WBC)

The Westpac share price has stormed 5% higher to $23.65 following the release of its first quarter update. Investors have been buying the banking giant’s shares after it delivered a $1.97 billion quarterly cash profit. This was more than double the quarterly average of $808 million it achieved during the second half of FY 2020. Westpac recorded an impairment benefit of $501 million in the period as the COVID-19 impact receded.

More reading

• Why the EML Payments (ASX:EML) share price is rocketing 19% higher
• Domino’s (ASX:DMP) share price higher after delivering strong first half growth
• Leading broker says Redbubble (ASX:RBL) share price selloff is a buying opportunity
• Westpac (ASX:WBC) share price on watch as it delivers $2bn quarterly profit result
• 3 things you might have missed from the Redbubble (ASX:RBL) result

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and EML Payments. 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 EML Payments Ltd (ASX: EML) share price has been a very strong performer on Wednesday.

In morning trade the payments company’s shares were up as much as 19% to $5.00.

The EML Payments share price has since pulled back but remains 12% higher at $4.72 at the time of writing.

Why is the EML Payments share price rocketing higher?

Investors have been fighting to get hold of EML Payments shares this morning following the release of its half year results.

For the six months ended 31 December, the company reported strong growth across all key metrics.

EML Payments reported a 54% increase in group gross debit volume to $10.2 billion, which led to a 61% jump in revenue to $95.3 million.

Due to the company’s pivot to deriving the majority of its revenue from the General Purpose Reloadable (GPR) segment, its margins narrowed slightly.

This ultimately led to group earnings before interest, tax, depreciation and amortisation (EBITDA) growing at a slightly slower (but strong) rate of 42% to $28.1 million. And on the bottom line, the company reported group net profit after tax (before amortisation) growth of 30% to $13.2 million.

EML Payments achieved underlying operating cash inflows of $35.1 million, up 68% on the prior corresponding period. This left it with a cash balance of $136.5 million. No dividend was declared.

What were the drivers of its growth?

The key driver of EML Payments’ growth during the first half was the aforementioned GPR segment.

Gross debit volume from the GPR segment grew 233% over the prior corresponding period to $4.87 billion. This was driven largely by the inclusion of Prepaid Financial Services, which contributed $3.12 billion in gross debit volume. EML Payments completed the acquisition of the UK-based business in April 2020.

As expected, the company’s Gift & Incentive (G&I) segment struggled during the first half due to COVID-19 related mall closures, lockdowns, and social distancing regulations. Its gross debit volume fell 11% to $0.75 billion.

Finally, the Virtual Account Numbers (VAN) segment performed well and delivered a 6% increase in gross debit volume to $4.59 billion. Management advised that this was driven by volume growth from existing customers. The business finished the period on a run rate of $815 million per month. Management feels this is a positive sign for the remainder of the year.

Outlook

Speaking of the remainder of the year, this morning the company has reinstated its guidance for FY 2021.

Full year revenue is forecast to come in between $180 million and $190.0 million. This will be up 48% to 56% on FY 2020.

EBITDA is forecast between $50 million and $54 million, up 54% to 66% on FY 2020.

Finally, net profit after tax before amortisation is forecast to be in the range of $30 million to $33.5 million. This will be up 25% to 40% on FY 2020.

Management notes that its guidance incorporates the uncertainty of COVID-19 as lockdown and social distancing measures remain in place for the foreseeable future in many of its key markets in Europe and North America.

More reading

• EML Payments (ASX:EML) share price still 27% below pre-COVID high
• ASX 200 rises 1%, Zip soars, REA reports
• 2 small cap ASX shares that are growing quickly
• 2 compelling ASX payment shares to buy
• 3 compelling ASX growth shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. 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 Evolution Mining Ltd (ASX: EVN) share price is among the worst performing stocks today even as it unveiled its best interim net profit in its history.

The Evolution share price crashed 7.9% to a 10-month low of $4.31 this morning. This makes the gold miner the third worst performer on the S&P/ASX 200 Index (Index:^AXJO).

The only ASX shares that are in a deeper hole are the Zip Co Ltd (ASX: Z1P) share price with its 11.9% tumble and the Pro Medicus Limited (ASX: PME) share price with its 8.4% dive.

Record profits sink Evolution share price

But it seems good isn’t good enough when it comes to Evolution. The miner posted a 57% uplift in underlying net profit to $234 million for the six months to end December 2020.

The strong gold price and bigger margins helped drive the result. Earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved 6% to 52%, which puts it around the top of the sector.

However, revenue only increased by a more modest 9% as the higher gold price was offset by a drop in volume sold.

Not all good news

Also, the increase in EBITDA margin isn’t related to operating costs as that was roughly flat compared to the previous period.

While management was also touting its strong cash generation prowess from favourable tailwinds, group cash flow declined by 10% to $218.1 million.

The record result also wasn’t enough to convince management to boost its interim dividend. That remains flat at 7 cents a share.

Flat dividend as cash drops

To be frank, the dividend decision isn’t a big deal. No one buys an ASX gold miner for income. Even if Evolution did lift its dividend, it would make little difference to total shareholder returns.

Also, given the drop in cashflow, it is probably prudent for management to hold on to the cash.

Having said that, Evolution’s half year results may not be the only factor pressuring the Evolution share price.

Metal fatigue hits ASX gold shares

The spot gold price fell 0.3% to US$1,788 an ounce and some gold traders are predicting more falls for the precious metal.

This is because the yellow metal failed to hold above US$1,800 an ounce and that could invite more selling pressure.

Other ASX gold miners are also on the nose this morning, although not quite to the same extent as Evolution.

The Newcrest Mining Ltd (ASX: NCM) share price shed 2.9% to $24.95 and the Northern Star Resources Ltd (ASX: NST) dropped 6.6% to $10.85 at the time of writing.

More reading

• Why the Pro Medicus (ASX:PME) share price is getting thumped today
• Why is the Splitit (ASX:SPT) share price underperforming Afterpay and Zip?
• 5 things to watch on the ASX 200 on Wednesday
• The latest ASX shares upgraded by brokers to “buy” during the reporting season
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps

Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Evolution (ASX:EVN) share price crashed despite record results appeared first on The Motley Fool Australia.

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Bapcor Ltd (ASX: BAP) shares are sliding in morning trade despite the company’s results for the first half of the 2021 financial year (H1 FY21) showing significant growth. At the time of writing, the Bapcor share price has slumped 3.72% to $7.76.

What did Bapcor report?

The Bapcor share price is failing to lift off this morning despite the company reporting record results for the half-year ending 31 December. The vehicle parts and services provider said revenue grew across all of its business segments.

Revenue from operations increased 25.8% over the prior corresponding period’s $702.5 million to $883.6 million.

Pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) of $145.6 million increased by 36.5% from H1 FY20.

Pro-forma net profit after tax (NPAT) of $70.2 million was up 54.0%, while statutory NPAT increased 49.7% to $67.7 million.

Bapcor will pay an interim dividend of 9 cents per share (cps), fully franked. That’s up 12.5% from the 8 cps paid in H1 FY20.

Commenting on the results, Bapcor’s CEO Darryl Abotomey said:

The group added 27 new company locations throughout our network resulting in our business now having over 1,100 locations throughout Australia, New Zealand and Thailand…

Significant progress has continued to be made in investments to drive the long-term success of Bapcor. The new distribution warehouse building at Tullamarine in Victoria is nearing practical completion while a new point of sale system has been implemented in Autobarn and a new e-commerce platform will be launched over the next 2 months.

Further investment in digital transformation is underway. Bapcor continues to have avenues to drive the performance of the business including further network growth, realising operational efficiencies and expansion of our own brand product range.

Abotomey said that the company’s performance in January was at a similar level to the first half of the 2021 financial year.

He cited that mean market consensus for Bapcor’s proforma full year NPAT is around $122 million, which “does not appear unreasonable”, dependent on future economic conditions.

Bapcor share price snapshot

The Bapcor share price is up 14.41% over the past 12 months. That compares to a 3% loss on the S&P/ASX 200 Index (ASX: XJO). Year to date, Bapcor shares have fallen 2.3%.

Based on the current Bapcor share price, the company commands a market capitalisation of around $2.7 billion.

More reading

• 2 ASX 200 shares to buy for growth
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• Got money to invest for dividends? Here are 3 ASX shares
• 2 ASX dividend shares rated as strong buys by brokers

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Bapcor (ASX:BAP) share price stalls despite record results appeared first on The Motley Fool Australia.

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The St Barbara Ltd (ASX: SBM) share price is falling this morning after the gold miner released its half-year results. By the look of the numbers, it was a bit of a mixed bag for the 6-month period.

At the time of writing, the St Barbara share price is trading 4.35% lower at $2.20.

Here are the numbers for St Barbara

The gold miner reported a statutory profit after tax of $37 million, down from the $39 million bagged last year. On the other hand, the underlying profit increased 14% to $40 million from $35 million. The key difference between these figures is that statutory profit is the accounting-based profit, whereas underlying is more of an internal profit that excludes some accounting items such as impairments.

St Barbara’s gold production was also down from the previous corresponding period. Production was 162,660 ounces during the recent half, compared to 165,921 last year. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) margin came in at 42%.

Furthermore, global operations contributed a net cash contribution of $100 million. The miner benefitted from a stronger gold price during the period, resulting in the flat result, despite the fall in production.

The result comes with the announcement that St Barbara will pay a 4 cents per share dividend fully franked. Payment will be on 24 March, with the ex-date (cutoff) being 2 March.

CEO commentary

Commenting on the results, St Barabara CEO Craig Jetson said:

This financial result represents an encouraging recovery from the operational disappointments of the first quarter, with improving contributions from all three operations.

Over consecutive halves, Atlantic Gold has delivered record production as continuous improvements in mill throughout generated early returns. St Barbara is in a strong financial position that affords us the opportunity to support growth projects across all three of our operating jurisdictions.

In the coming months we will provide an update on the sulphide feasibility study at Simberi, the Leonora Province plan and submit environmental impact statements for Atlantic Gold’s growth projects.

Despite the cash inflows, St Barbara’s cash levels are hovering around $118.7 million at the end of the half. This is in contrast to the $405.5 million in cash the company held at the end of June 2020.

St Barbara share price snapshot

The gold miner’s share price has slipped 15.4% over the last 12 months. However, from the March 2020 low of $1.665, the share price has rallied 38%. St Barbara now holds a market capitalisation of $1.6 billion.

To give a bigger picture view, the gold price per ounce has dipped roughly 2% in the last 12 months.

More reading

• 3 ASX 200 gold miners paying dividends
• Brokers list the latest ASX shares to buy in this market meltdown
• Top broker says you should buy these oversold ASX gold stocks now

Motley Fool contributor Mitchell Lawler 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 Treasury Wine Estates Ltd (ASX: TWE) share price is dropping lower this morning as the company announced its half-yearly results. Shares in the company are currently falling to a price of $9.78. As such, shares in the wine producer are down 1.21% since last nights close.

How did Treasury Wine perform in the first half?

Treasury Wine today announced its half-yearly report to the ASX. The company announced a sharp decline in net profit after tax (NPAT) down 24% to $175.3 million as the China conflict hurt the company’s earnings. As a result, the company’s earnings per share was also down by 24%.

The well documented ongoing impacts from the global pandemic and the disruptions to sales in China were key drivers of lower earnings in 1H21. Earnings before interest and tax (EBIT) came in at $284.1 million. Moreover, the company saw its cost of goods sold increase by 2.8%. Driven by a favourable portfolio mix shift, lower volume and higher costs.

Nonetheless, it was not all bad news for the wine producer as the company continued with the execution of its COVID-19 recovery plan. Treasury Wine stated that its plan ahead agenda is driving strong momentum towards recovery in all regions.

Furthermore, thanks to careful management the company retains a strong balance sheet. Net debt was down to $403.7 million in the first half to $1,030.5 million. With total available liquidity remaining strong with approximately $1.5 billion on hand at the end of last year.

The company will also pay an interim dividend of 15 cents per share, fully franked. Representing a payout ratio of 62% of NPAT. This is consistent with the company’s dividend policy.

Management Comments

On today’s results announcement, TWE’s Chief Executive Officer, Tim Ford commented:

Our first half fiscal 2021 results demonstrate that we are making progress against our TWE 2025 strategy, despite a period of significant disruption. Our progress is the result of disciplined execution of the plans we put in place to manage through these disruptions and highlight the strength of our business models in all regions.

Looking Forward

As Management noted, it expects the difficult current conditions to continue through the remainder of fiscal 2021.

In China, Treasury Wine expects that demand for its portfolio will remain extremely limited. However, the company is confident around its plans for reallocation of its luxury brands away from China as it continues to engage with its customer and consumer base.

Nonetheless, it does not see these benefits having effect until the end of FY21. It expects 2H21 EBIT to be below that of this report.

The Treasury Wine share price has had a difficult year, falling by 12%. This is well below the flat All Ordinaries Index (ASX: XAO) return in the same period.

More reading

• Leading brokers name 3 ASX shares to sell today
• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• ASX 200 rises 0.6%, Vocus jumps on takeover offer, Afterpay hits new record
• ASX 200 up 0.6%: Vocus rockets, Zip surges, & Treasury Wine rebuffs speculation

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Treasury Wine (ASX:TWE) share price is falling appeared first on The Motley Fool Australia.

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