The great news for growth investors is that there are a good number of quality companies on the Australian share market with strong growth potential.

Three that could be worth considering are listed below. Here’s what you need to know about these ASX growth shares:

Kogan.com Ltd (ASX: KGN)

The first ASX growth share to look at is Kogan. This ecommerce company has been tipped as a great buy and hold option due to the structural shift to online shopping and the growing popularity of its website. In addition to this, management has bolstered its offering with value accretive acquisitions recently. If these are successful, they could accelerate its growth in the coming years. Analysts at Credit Suisse are positive on the company. The broker currently has an outperform rating and $21.08 price target on its shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Another ASX growth share to look at is Pushpay. It is leading donor management and community engagement platform provider with a keen focus on the faith sector. While this might appear to be a bit of a niche market, it certainly is a lucrative one. Pushpay has been winning market share over the last few years, which has underpinned stellar earnings growth. This is expected to continue in FY 2021, with management guiding to operating earnings of between US$56 million and US$60 million. This will be an increase of 123% to 139% year on year. Positively, this is still only a small slice of the overall market, which gives it a long runway for growth. Goldman Sachs is a fan of the company. The broker currently has a conviction buy rating and $2.59 price target on its shares.

ResMed Inc. (ASX: RMD)

A final ASX growth share to consider is ResMed. It is a medical device company which has a focus on sleep treatment solutions and ventilators. ResMed has been growing strongly in recent years and appears well-placed to continue this positive form in the future. This is thanks to its world-class products and the massive number of undiagnosed sleep apnoea sufferers globally. The company also has a rapidly growing digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring revenues and a material amount of high quality data. Morgans currently has an add rating and $30.99 price target on ResMed’s shares.

More reading

• Got money to invest? Here are 3 ASX shares to buy
• 2 fantastic ASX growth shares that could be market beaters
• Here’s why the Altium (ASX:ALU) share price could be a buy
• 2 of the best ASX growth shares to buy now
• 2 high quality blue chip ASX 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 Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Kogan.com ltd, PUSHPAY FPO NZX, and ResMed Inc. 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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Over the last few weeks the buy now pay later (BNPL) industry has been an incredible place to be invested.

During this time a number of BNPL shares have recorded mouth-watering gains for their shareholders.

How are the BNPL shares performing?

Since this time last month:

• The Afterpay Ltd (ASX: APT) share price is up 16%.
• The Openpay Group Ltd (ASX: OPY) share price is up 33%.
• The Sezzle Inc (ASX: SZL) share price has gained 57%.
• The Zip Co Ltd (ASX: Z1P) share price has rocketed 143% higher.

What about the Splitit Ltd (ASX: SPT) share price?

Well, over the last 30 days the Splitit share price has not only underperformed its peers, it has also underperformed the S&P/ASX 200 Index (ASX: XJO) and its 3.8% gain.

During this time the Splitit share price has lost 10% of its value.

Why is the Splitit share price underperforming?

Splitit never really seemed to capture the imagination of investors in the same way that Afterpay and Zip did. This may be due to its different (or unusual?) choice of business model.

The BNPL industry is aiming to replace credit cards and is doing a great job at it. Credit card usage is declining as younger consumers turn away from them in their droves.

However, Splitit uses an existing credit card to turn a payment into smaller interest free instalments. This appears to be potentially missing out on arguably the most important BNPL demographic that don’t want credit cards.

What else is weighing on its shares?

Also weighing on the Splitit share price this month could be news that its co-founder, Alon Feit, has been selling down his stake.

According to a notice, between 14 January and 9 February, Mr Feit sold 13,861,730 shares through on-market trades for a total consideration of approximately $20.3 million.

However, given how Mr Feit was voted off the board along with another long time director Mark Antipof late last year, it may not be overly surprising to see him selling down his stake.

More reading

• Payright (ASX:PYR) shares get speeding ticket after 32% surge
• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• What’s going on with the Zip (ASX:Z1P) share price?
• Why the Openpay (ASX:OPY) share price is up 17% and could go higher
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

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 ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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Some of the most exciting businesses on the ASX are tech shares. They could be worth thinking about for your portfolio.

Due to the fact that many technology businesses offer an intangible product, it can mean that their gross profit margins may be very high and growth can be quicker.

Technology businesses are attracting a lot of investor intention and these two ideas could be ones to look out for:

Xero Limited (ASX: XRO)

Xero is one of the world’s largest cloud accounting software providers. Over the last decade it has taken the approach of heavily re-investing profit and cashflow back into the business to generate more long-term growth.

Over the last five years, Xero has been one of the best performing S&P/ASX 200 Index (ASX: XJO) shares. The ASX tech share has seen its share price grow by 843%. According to the ASX, it now has a market capitalisation that’s north of $19 billion.

The company has generated a lot of business growth to get this far. In the FY21 half-year result it said that it had increased its subscriber numbers by another 19% to 2.45 million.

Those subscribers come from all over the world, though Australia is still the biggest market, which saw 21% growth of subscribers to 1.01 million in the latest result. UK subscribers rose 19% to 638,000, New Zealand subscribers increased 13% to 414,000, North American subscribers went up 17% to 251,000 and rest of the world subscribers grew 37% to 136,000.

The global subscriber growth helped operating revenue rise by 21% to NZ$410 million. At 30 September 2020, its annualised monthly recurring revenue had increased to US$877.5 million.

Xero said that it was being disciplined with its financial management during the uncertain COVID-19 period, which led to “strong” growth of net profit, free cash flow and earnings before interest, tax, depreciation and amortisation (EBITDA). The NZ$71.2 million increase in operating revenue led to a NZ$49.4 million increase in free cashflow for the ASX tech share. This is helped by the fact that Xero’s gross profit margin is now 85.7%.

In a signal that Xero isn’t anywhere near finished with its growth journey, it stated that it still has ambitions for high growth and it intends to continue to innovate, invest in new products and customer growth, and respond to opportunities.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a business that provides an integrated breast health platform which helps provide feedback and also aims to help prevent advanced-stage breast cancer.

This business is another one with a very high gross profit margin. In the FY21 half-year result it reported that its gross margin was 92%. That report showed that revenue rose by 38%, subscription revenue increased 71% and gross profit increased by 43%.

At the time of the half-year result, it had NZ$19.9 million of annual recurring revenue (ARR) and approximately 27% of women in the US had a Volpara product applied on their images and data.

The ASX tech share then released its FY21 third quarter result which showed ARR had risen to NZ$20.7 million and its average revenue per user (ARPU) grew 5% to US$1.22.

A couple of weeks ago, Volpara announced it was acquiring CRA Health in the US for an upfront payment of US$18 million. This acquisition increases Volpara’s market share to over 30% of US breast screenings, it increases the ARR to NZ$26.9 million and is likely to increase the ARPU of the business as well.

Management believe that this deal has elevated the company to be a leader in personalised breast care and could spur more growth because CRA’s software is integrated with the major electronic health record (EHR) as well as with genetics companies.

More reading

• 3 of the best ASX shares you can buy right now
• 3 reasons why the Xero (ASX:XRO) share price could be a buy
• Take a look at the ASX’s new cloud ETF
• 2 extraordinary ASX shares to buy in 2021
• What’s with the Xero (ASX:XRO) share price drop today?

Tristan Harrison 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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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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With interest rates unlikely to go higher anytime soon, ASX dividend shares look set to remain the best place to earn a passive income.

But which ASX dividend shares should you buy? Here are two that are highly rated:

BHP Group Ltd (ASX: BHP)

This mining giant could be a good option for income investors that don’t mind investing in the resources sector. On Tuesday the Big Australian released its half year results and reported a 15% increase in revenue to US$25.64 billion and a 21% jump in underlying EBITDA to US$14.7 billion.

And thanks largely to sky high copper and iron ore prices, BHP generated significant free cash flow.

Positively, the company elected to return almost all of its US$5.2 billion free cash flow to shareholders through dividends. BHP declared a fully franked interim dividend of US$1.01 per share (~A$1.30 per share), which was up 55% on the prior corresponding period.

Analysts at Goldman Sachs expect similar in the second half. Based on the current BHP share price, they estimate that it offers investors a 5.9% full year dividend yield. The broker currently has a buy rating and $47.50 price target on its shares.

Transurban Group (ASX: TCL)

Another ASX dividend share to consider buying is Transurban. This leading toll road operator is the owner of a collection of key roads in Australia and North America.

While times have been hard over the last 12 months, traffic levels are improving and are likely to continue doing so as vaccines are rolled out.

Looking ahead, due to the quality of its roads, the time savings they offer, and their strong pricing power, Transurban appears well-placed to increase its distribution at a solid rate over the next decade, just like it has in the past.

One broker that is positive on the company is Ord Minnett. It currently has a buy rating and $16.50 price target on its shares. The broker is forecasting a 42.8 cents per share distribution in FY 2021 and then a 56.9 cents per share distribution in FY 2022. 

Based on the latest Transurban share price, this will mean forward yields of 3.2% and 4.25%, respectively.

More reading

• Here’s why the BHP (ASX:BHP) share price is closing in on its record high
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• 2 ASX dividend shares rated as buys by brokers
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• Why BHP, Codan, Seven West Media, & Zip shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 Redbubble Ltd (ASX: RBL) share price dropped 18% yesterday after the e-commerce business released its FY21 half-year result.

What is Redbubble?

Redbubble owns two of the world’s largest global online marketplaces for artist-produced products. Various products are sold on those websites including apparel, stationery, housewares, bags, wall art and so on.

What were the main highlights of the Redbubble FY21 result?

The Redbubble report included a lot of growth. It said it generated $353 million dollars of marketplace revenue, up 96% compared to the prior corresponding period.

Gross profit went up even faster, rising by 118% to $144 million. Redbubble generated $42 million of earnings before interest and tax (EBIT), compared to a loss of $2 million in the first half of FY20.

Operating cash flow of $80 million was up almost 100% from the $41 million generated in the prior corresponding period.

The company benefited from a positive delivery date adjustment during this period. Excluding this adjustment, in the six months to 31 December 2020, marketplace revenue grew 90% to $343 million, gross profit rose 102% to $138 million and it made $35 million of EBIT – up from $0.2 million last year.

The company reported that the number of artists using the marketplaces increased to 659,000 – up from 511,000 in FY20.

3 things you may have missed:

1: The trading update

Management said that healthy demand continued into January, with marketplace revenue (paid) rising by 66% (or 82% in constant currency terms) compared to the prior corresponding period.

Investors like to know what the recent trading of a business has been to see if trends are continuing or not. For Redbubble, it was able to tell investors about the first month of the second half of FY21.

The growth rate of 62%, or 82% in constant currency terms, was a slower growth rate than what the company had experienced in the first half of the financial year.

2: Mask sales are now a smaller part of the overall sales picture

In the last few months of FY20, Redbubble was selling large numbers of masks to consumers who wanted a product to protect themselves against COVID-19. The addition of the mask product line amounted to millions of dollars of extra revenue for Redbubble.

Redbubble said that high growth rates continued across all geographies and product categories. The company revealed that mask demand moderated to 7% of the overall product mix for the second quarter.

3: Rising profit margins

The ASX technology share revealed that all of its profit margins improved compared to the first half of FY20.

The gross profit margin increased by 4.1 percentage points to 40.8%, up from 36.7%. The gross profit after paid acquisition, or marketing, (GPAPA) margin improved by 2.6 percentage points to 28.3%.

The earnings before interest, tax, depreciation and amortisation (EBITDA) margin rose significantly after an increase of over 1,000% to $48.8 million of EBITDA.

The EBIT margin is now positive. Last year there was a $2 million EBIT loss, in this result EBIT was positive at $41.8 million.

More reading

• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today
• Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results
• Got money to invest? Here are 3 ASX shares to buy
• 3 reasons why the Redbubble share price could be a buy

Motley Fool contributor Tristan Harrison 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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There are a number of ASX dividend shares that have dividend yields of more than 4%.

The Reserve Bank of Australia (RBA) has pushed the official interest rate down to just 0.1%, which makes it difficult to generate any meaningful income from interest.

Dividend yields from some shares are relatively quite a bit higher. These two businesses have dividend yields materially more than 4%:

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the biggest furniture-selling businesses on the ASX. It imports over 5,000 of containers of furniture per year.

The company has been a beneficiary of the large amount of consumer spending that has occurred in Australia over the last year. This was evident in the company’s most recent result for the half-year to 31 December 2020 where sales increased by 24.4%.

Not only is the sales revenue continuing to increase, but profitability is increasing even faster. The gross profit margin went up by 180 basis points to 64%, whilst the earnings before interest, tax, depreciation and amortisation (EBITDA) and earnings before interest and tax (EBIT) margins both improved by 1,270 basis points to 35.2% and 33.6% respectively.

The ASX dividend share reported that its underlying net profit after tax grew 99.5% to $40.5 million and the underlying earnings per share (EPS) rose 99.5% to 50 cents. Operating cashflow before interest and tax rose 222.3% to $53.5 million.

This result allowed the company’s board to increase the interim dividend per share by 60% to 40 cents.

Brokers at Citi, which rate Nick Scali shares as a buy, think the company will pay an annual dividend of 80 cents per share, equating to a grossed-up dividend yield of 10%.

Centuria Industrial REIT (ASX: CIP)

As the name suggests, this is a real estate investment trust (REIT) which invests in and owns industrial property. It describes itself as Australia’s largest domestic pure play industrial property investment vehicle.

It owns 59 properties with a total value of $2.4 billion, which are in prime locations and situated close to important infrastructure.

The ASX dividend share owns manufacturing facilities, with tenants like Arnott’s and Visy. It has distribution centres with tenants such as Woolworths Group Ltd (ASX: WOW) and Australian Pharmaceutical Industries Ltd (ASX: API). The REIT owns transport logistics with tenants such as Australia Post and DHL. Centuria Industrial REIT also owns data centres, tenanted by Telstra Corporation Ltd (ASX: TLS), and it also owns cold storage facilities.

In terms of the geographical location of these buildings, 89% of the portfolio is weighted to the eastern seaboard. Occupancy currently sits at 97.7% with a weighted average lease expiry (WALE) of 9.8 years. Less than 8.5% of the portfolio has a lease expiry date within the next 18 months.

In terms of the balance sheet, it had a gearing ratio of 29.6% at the time of the half-year result.

For FY21, the ASX dividend share upgraded its funds from operations (FFO) – its rental profit – expectations to be no less than 17.6 cents per unit, with a distribution of 17 cents per unit. The guidance of an annual 17 cents per unit distribution equates to a current yield of 5.5%.

UBS currently has a buy rating on Centuria Industrial REIT with a share price target of $3.38.

More reading

• Here’s what’s likely to supercharge ASX logistics demand in 2021: fundie
• ASX retail shares show strong signs of resurgence 
• Nick Scali (ASX:NCK) returns half the JobKeeper it received
• How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?
• ASX stock of the day: Temple & Webster (ASX:TPW) goes from strength to strength

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Woolworths 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and stormed higher. The benchmark index rose 0.7% to 6,917.3 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX futures pointing lower

The Australian share market looks to have run out of steam. According to the latest SPI futures, the ASX 200 is expected to open the day 20 points or 0.3% lower this morning. This follows a mixed start to the week on Wall Street following the President’s Day holiday. In late trade the Dow Jones is up 0.25%, the S&P 500 is flat, and the Nasdaq is down 0.4%.

Oil prices flat

Energy producers Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) will be on watch today after a subdued night for oil prices. According to Bloomberg, the WTI crude oil price is flat at US$59.95 a barrel and the Brent crude oil price is flat at US$63.27 a barrel. Oil prices have been climbing this week after a deep freeze in the US shut oil wells.

Coles half year results

The Coles Group Ltd (ASX: COL) share price could be on the move today when it releases its half year results. According to a note out of Goldman Sachs, its analysts are expecting Coles to report group sales of $20,585.9 million for the half. This will be an increase of 9.2% on the prior corresponding period. On the bottom line, the broker is expecting a 10.5% increase in underlying net profit after tax to $540.4 million. This is forecast to lead to an interim dividend of 34 cents per share being declared.

Gold price sinks

Gold miners Evolution Mining Ltd (ASX: EVN) and Resolute Mining Limited (ASX: RSG) could come under pressure after the gold price sank overnight. According to CNBC, the spot gold price dropped 1.4% to US$1,798.00 an ounce. Rising US treasury yields are weighing on the safe haven asset.

Webjet half year results

All eyes will be on the Webjet Limited (ASX: WEB) share price this morning when it releases its half year results. The online travel agent is expected to report a material loss due to the impacts of COVID-19 on its operations. Investors will no doubt be paying close attention to commentary around its current cash burn and when it expects to be profitable again.

More reading

• The latest ASX shares upgraded by brokers to “buy” during the reporting season
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• Leading brokers name 3 ASX shares to sell today
• NRW (ASX:NWH) share price jumps on acquisition update
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of 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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The sixth biggest ASX-listed company, Fortescue Metals Group Limited (ASX: FMG), suffered a $3.1 billion reduction in market capitalisation today, following the announcement of leadership changes. 

The Fortescue share price nosedived following the announcement of several resignations in the company’s leadership team, leaving Fortescue shares down 3% at the closing bell.

Losing sight of values and culture

The details are sparse at the moment, with little being divulged to the market ahead of the company’s half-year results expected on Thursday. What is clear is that the following members of the leadership and projects team have resigned:

• Greg Lilleyman – Chief Operating Officer
• Don Hyma – Director of Projects
• Manie McDonald – Director of the Iron Bridge project

In an interview conducted this evening by the Australian Financial Review, CEO Elizabeth Gaines reiterated that there are no suggestions of inappropriate behaviour, corruption, or the like. Rather, this is a result of cultural issues and communication failures.

Cost concerns were initially raised for the US$2.6 billion magnetite Iron Bridge project in January. Reportedly, Peter O’Connor of Shaw and Partners estimates these blowouts could range somewhere between $1.2 billion and $3.34 billion.

Taking into account this sudden hit to the Iron Bridge team, the project must now be in further doubt.

Where to from here for Fortescue?

Derek Brown, current General Manager Solomon, has been put in place as Acting Director of Projects. It’s likely Brown will assume the role of attempting to piece together the tattered pieces left behind from the abrupt exits of his predecessors.  

In an additional measure to take accountability for whatever events have transpired, Elizabeth Gaines and chief financial officer Ian Wells are forgoing all incentive payments during this financial year. Gaines commented on the events:

As CEO I must also take accountability and learn from this. Both Ian Wells, Chief Financial Officer and I will forego all incentive payments this financial year. We take this opportunity to reset the Company’s focus on our culture and values which defines us and makes Fortescue a truly great company.

Lustre lost for Fortescue’s earnings

What could have been a stellar earnings report will now have a dark cloud looming over its head. Many shareholders will be more transfixed on greater detail of the exacting events, than on any growth metric or dividend.

The Fortescue share price is currently sitting at $23.70, down 4.4% in 2021 but up a significant 117% on this time last year.

More reading

• Why the SRG Global (ASX:SRG) share price reached a 52-week high
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• Is the Fortescue (ASX:FMG) share price a buy for dividends?
• 5 things to watch on the ASX 200 next week
• 2 ASX dividend shares to boost your income

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 CSL Limited (ASX: CSL) share price climbed 2% today after the AstraZeneca – Oxford University COVID-19 vaccine was approved for use in Australia.

According to reporting by the Australian Financial Review, the provisional approval will mean that adults who are 18 or older will be able to take two doses of the drug, between four to twelve weeks apart.

The Australian federal government has ordered almost 54 million doses of the vaccine, with CSL to start manufacturing within the country from the end of next month. CSL has been tasked with manufacturing 50 million doses. 

One of the main benefits of the Oxford University – AstraZeneca COVID-19 vaccine is that it can be held in normal refrigerators. The Pfizer COVID-19 vaccine needs to be stored at -70C.

Some of the first Australians to receive the vaccine will be border workers, health workers involved in the fight against COVID-19, and people who are involved in aged care settings.

What is CSL’s involvement in the COVID-19 vaccine?

In regards to the COVID-19 vaccine, CSL announced back in September 2020 that it had signed an agreement with the Australian federal government.

CSL will manufacture the COVID-19 vaccine from its Australian facilities, as well as manufacturing the company’s vital core therapies.

The Australian government has provided funding to support CSL’s readiness to manufacture the Oxford University – AstraZeneca vaccine, which has expanded Australia’s on-shore vaccine manufacturing capabilities.

The funding is being used to establish at-risk components required to produce the commercial manufacture of the recombinant vector-based COVID-19 vaccine, including funding for specialised equipment, recruitment training and redeployment of personnel and retooling and reconfiguration of existing manufacturing facilities to ‘good manufacturing practice’ standards.

At the time of the announcement of the deal with the federal government, CSL CEO and managing director Paul Perreault said:

“Acknowledging that CSL is the only company in Australia with manufacturing facilities capable of producing this vaccine, we thank the Australian government for their support, ensuring Australia has access to onshore COVID-19 vaccine production and supply. Our facilities will require modifications in order to fulfil the compliance requirements for working with vector-based vaccines, as well as the addition of skilled personnel and further capital investment.”

Mr Perreault also spoke of the company’s prior involvement in manufacturing vaccines: “CSL’s history is linked with a commitment to Australia’s public health needs. In 1918 we produced a vaccine for the Spanish influenza pandemic, in 2009 we developed a vaccine for the swine flu pandemic, and now we are incredibly proud to use our skills, technology and facilities to help ensure Australia – and the world – can access a COVID-19 vaccine.”

More reading

• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• 5 things to watch on the ASX 200 next week
• How to generate $50,000 a year from ASX dividends
• Here’s how to make a $1 million share portfolio by investing $1,000 a month
• Top brokers name 3 ASX shares to buy today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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 Brambles Limited (ASX: BXB) share price will be one to watch on Wednesday morning.

This follows the release of the supply chain logistics company’s half year results after the market close.

How did Brambles perform in the first half?

Brambles was a positive performer during the first half of FY 2021.

Management advised that COVID-19 and Brexit impacted the operating environment, driving elevated levels of demand for pallets. However, changes in consumer demand patterns and higher input costs resulted in operating cost increases.

According to the release, for the six months ended 31 December, Brambles reported a 7% increase in sales revenue to US$2,565.5 million. This was driven by strong volume growth and price realisation in the global Pallet businesses and the contribution from the commencement of a large Australian RPC contract. This offset COVID-19 related declines in Automotive and Kegstar businesses.

In respect to earnings, underlying operating profit increased 7% to US$465 million and profit after tax lifted 6% to US$295.2 million.

Also growing was the company’s operating cash flow, which came in US$321.8 million higher at US$423.6 million. Management advised that this reflected higher earnings, a disciplined approach to capital expenditure, and some timing benefits in the first half of FY 2021.

This allowed the Brambles board to declare a 10 U.S. cents per share interim dividend. This represents a payout ratio of 50%, which is in line with Brambles’ dividend policy to payout between 45% and 60% of underlying profit after finance costs and tax.

Management commentary

Brambles CEO, Graham Chipchase, was pleased with the half.

He commented: “We experienced elevated levels of demand in our key pallet businesses in the first half, as retailers raised inventories to accommodate increased levels of at-home consumption and to provide greater contingency against changes in consumer demand. There was also a noticeable shift within the consumer staples segment towards established, household brands which drove stronger volume growth with our largest customers.”

“Operationally, COVID-19 related changes in network dynamics and customer demand patterns resulted in additional pallet collection and repair costs, with wage inflation in most regions increasing plant costs further. Our focus on optimising the use of our existing asset pool to service elevated levels of demand also contributed to higher plant and transport costs in the period and limited our investment in new pallets.”

Outlook

The good news for shareholders, and the Brambles share price tomorrow, is that management has upgraded its FY 2021 guidance following its solid first half.

It now expects full year sales revenue growth of 4% to 6% in constant currency with improving profit margins. This is expected to lead to underlying profit growth of 5% to 7% in constant currency.

Mr Chipchase added: “The strong first-half result has allowed us to upgrade our FY21 sales revenue and earnings guidance. We remain committed to delivering Group Underlying Profit leverage and expect US margins to improve by approximately one percentage point, with the US automation programme on track for completion by the end of the fiscal year.”

More reading

• Why the Brambles (ASX:BXB) share price is climbing today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Brambles (ASX:BXB) share price on watch after solid first half and guidance upgrade appeared first on The Motley Fool Australia.

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