Warren Buffett is one of the most successful investors of all time. Therefore, following his advice could be a sound move when seeking to build a retirement portfolio.

Even if you have no retirement savings at age 40, it is not too late to build a nest egg that can provide a generous passive income in older age.

By starting to invest in cheap, high-quality shares today, you could capitalise on the long-term growth potential offered by the stock market.

Warren Buffett’s focus on undervalued stocks

Warren Buffett has sought to buy the best companies he can find when they are trading at the lowest prices. This enables him to benefit from their likely recovery as the economic outlook gradually improves. It also means that his money is invested in those businesses that may have the highest chance of surviving difficult trading conditions.

This could be especially relevant at the present time. The world economy faces its most difficult period since the global financial crisis. As such, only those businesses with wide economic moats and solid balance sheets may survive what could be a prolonged period of weaker sales and profit growth.

Warren Buffett’s aim to buy such companies at low prices has contributed to his outperformance of the wider stock market. Through purchasing high-quality businesses at low prices, you can obtain a wide margin of safety that leads to impressive capital growth as investor sentiment and company profitability improves.

Return prospects after the stock market crash

Clearly, some investors may be unsure about following Warren Buffett’s lead at the present time. The stock market crash has highlighted the volatility that can be present in equity markets. It could even return later this year, with risks such as the US election and the coronavirus pandemic being present.

However, the market crash could present a rare buying opportunity for investors. Many high-quality businesses are trading at low prices that factor in the risks faced by the world economy. This provides a wide range of choice through which to build a diverse portfolio of companies. Over time, they could recover to produce a surprisingly large nest egg from which to draw a passive income in older age.

Starting to invest at age 40

Following Warren Buffett’s tips from a standing start at age 40 could lead to a worthwhile retirement nest egg. After all, you are likely to have around 20-30 years left until you retire. This provides your portfolio with a substantial amount of time to grow.

Therefore, it is not too late to start investing in shares, with the market crash providing the perfect opportunity to buy undervalued stocks. Over time, they could make a positive impact on your financial future, and help to bring your retirement date a step closer.

More reading

• Why the CV Check (ASX:CV1) share price finished the day 5% higher
• Webjet (ASX:WEB) share price on watch after FY 2021 trading update
• APA Group (ASX:APA) plots a steady path to low emissions future
• The Austal (ASX:ASB) share price has dropped slightly amid corruption allegations
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CV Check Ltd (ASX: CV1) share price finished the day in positive territory following the announcement of a new customer win.

Despite the broader decline of the All Ordinaries Index (ASX: XAO), the CV Check closed the day at 18 cents, up 5.8%.

Let’s take a look at what CV Check updated the market with.

What does CV Check do?

CV Check, founded in 2004, is an online tech company that offers background screening and verification services.

The company conducts over 300,000 verification checks every year for private and government organisations, employers and individuals. These services include national police checks, employment reference checks, credit and financial checks, and predictive psychometric assessments, among other verifications.

International customers 

CV Check advised it had signed a new international customer to its strategic white line label rollout. Employment screening specialist, Vero Screening Ltd, was added to CV Check’s international wholesale customers.

Vero is an employment screening company based in Brighton, England. The business specialises in compliance, human resources, digital technology among other services. Vero has over 20 years’ experience in industry knowledge and in-house technology to protect clients from risk.

This new addition complements last week’s news that the company had signed NetForce Global LLC to its best-of-breed solution.

CV Check sees white labelling as a strategic objective and is focusing on servicing the international market.

Management commentary

Commenting on the new partnership, CV Check CEO Mr Rod Sherwood said:

In its FY2020 Annual Report, CV1 advised pre-commercialisation had commenced on the strategic project to take its white label technology beyond our current Australia and New Zealand base. We are pleased to advise that another major inbound international wholesaler will commence ordering pursuant to this initiative. We welcome Vero as an inbound international wholesale customer.

Vero CEO, Mr Rupert Emson also spoke about the agreement, adding:

We are excited to be partnering with CVCheck. As we are seeing increased demand for our international screening services, the Company’s full suite of screening services and advanced technology platform were a perfect match for our requirements. The CVCheck onboarding support team have been fantastic and we look forward to working with them to deliver on our clients’ global screening strategies.

The CV Check share price is up more than 28%, year to date, and is just shy of its 52-week high of 19 cents per share. 

More reading

• CV Check (ASX:CV1) share price storms 7% higher. Here’s why
• Here’s why the CV Check (ASX:CV1) share price has soared 30% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended CV Check Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Webjet Limited (ASX: WEB) share price will be one to watch on Friday following the release of its annual general meeting update after the market close.

What was in Webjet’s update?

As well as providing investors with a breakdown on its performance during an unprecedented FY 2020, management released an update on current trading.

In respect to the latter, Webjet revealed that bookings are still down materially from the pre-pandemic levels but are improving.

The Webjet OTA business recorded monthly bookings of 18,700 during September, down from its pre-COVID average of 131,300 per month. This represents 14.2% of pre-COVID levels, which compares favourably to a 7.1% recovery by the rest of the market.

This booking performance has improved into October. Webjet OTA’s bookings hit 15% of its calendar year 2019 levels for the week ending 7 October. Management notes that this side of the business will reach break-even when levels hit 23% of 2019’s levels.

The Webjet OTA business currently has a 10% share of domestic bookings, up from 5.2% a year earlier.

The key WebBeds business is improving but remains a long way from becoming breakeven. As of 7 October, its average total transaction value (TTV) stood at 12% of calendar year 2019 levels. It will need to surpass 45% of 2019’s levels to become profitable.

Though, management believes the business is well-placed to capitalise on growth as travel markets re-open.

Finally, the Online Republic business’ bookings were at 21% of 2019’s levels at the end of the first week of October. Once this hits 37%, the business will become breakeven.

Given its strong exposure to global domestic leisure markets, management believes it is well-placed to benefit from domestic-focused tourism around the world.

Outlook.

Management warned that the global travel industry continues to be under pressure from second waves, border closures, and the timing of a COVID-19 vaccine.

In light of this, it is continuing to focus on managing its costs. Pleasingly, this has resulted in its cash burn being lower than forecast. So far in FY 2021, its monthly cash burn is $9 million a month. This compares to $10.5 million in FY 2020.

Finally, management notes that its balance sheet is strong and provides it with sufficient capital to see it through to 2022.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• These are the 10 most shorted shares on the ASX
• 5 things to watch on the ASX 200 next week
• These were the worst performing shares on the ASX 200 last week

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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APA Group (ASX: APA) held its annual general meeting (AGM) today, which focused on the resilience of the company’s revenue streams and the drive to a lower emissions future. In fact, much of the company’s future plans revolved around reaction to the economy’s transition to lower emissions. APA Group owns and manages a network of natural gas pipelines.

Financial performance

Revenue was up 4.8% on the previous year, while earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 5.1% year on year. Consequently, the company was able to declare full year distributions of 50 cents per security. This is an increase of 6.4% on FY19. For long-term investors, total securityholder returns since APA’s listing 20 years ago in June are now 2,203%. 

The transition to low emissions economy is a significant area of focus for the company. While natural gas will undoubtedly remain critical , there are also significant opportunities in new energy sources, as well as opportunities to continue growing the company’s renewable portfolio. In addition, the company is now Australia’s 6th largest owner of renewable power generation assets, with just over half of its power generation coming from wind and solar.

For example, the Australian Renewable Energy Agency (ARENA) announced $1.1 million of funding for a renewable methane pilot project. The project seeks to determine whether it’s possible to create methane using solar powered electricity, water and CO2 from the atmosphere on an industrial scale. 

A pathway to low emissions growth

In April, the company published its Climate Change Position Statement. In further commitment to low emissions, it has also delivered its first Climate Change Resilience Report. This is a comprehensive analysis of the resilience of APA’s current asset portfolio under three divergent climate scenarios to 2050. Moreover, the company continues to play its critical role in addressing the urgent energy challenges of today. For instance, the government has specifically highlighted the gas sector in supporting Australia’s recovery from COVID-19.

With a forecast 2023 winter gas supply shortfall, the company is working to ensure capacity is not a constraint. To this end, it advised it will invest up to $700 million to increase capacity by up to 50% from its Wallumbilla Gas Hub in Queensland to southern markets.

Company Managing Director and CEO, Rob Wheals, commented: “As we’ve said before, we see over $4 billion of domestic growth opportunities over the next five to 10 years. Of these as much as $1 billion of projects are in active discussion with customers for decisions and/or delivery over the next two to three years.”

APA share price performance

The APA share price is down by around 3% since the start of the year. It currently trades at a price-to-earnings ratio of 39.6, and has a trailing 12-month dividend yield of 4.6%.

More reading

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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Austal Limited (ASX: ASB) share price fell slightly as the shipbuilder refuted any wrongdoing over a corruption allegation involving the Australian Border Force (ABF). Austal’s share price closed 0.93% lower at $3.19.

What happened?

Austal cited a story in The Age regarding an investigation into the conduct of ABF employees. The issue concerned an outstanding milestone payment by ABF for the Cape Class program in 2015.

While Austal noted it did not usually respond to media articles or speculation, the company felt the need to in this case as the story had the potential “for adverse, misleading and incorrect inferences to be drawn against the company as a result”.

Austal said the “success fee” mentioned in the article was paid as a result of partial satisfaction of a contractual milestone payment obligation. Rather than, as the article suggested, “corruption inside the ABF”.

The article also suggested that the investigation uncovered evidence that the company “misled markets”. However, the shipbuilder denied the allegation, claining it was not aware of any such evidence.

Austal said in the announcement the investigation was over, but journalist reports said that the investigation was ongoing, albeit in a different form.

Austal has had no contact with the investigation board –the Australian Commission for Law Enforcement Integrity.

About the Austal share price

Austal is Australia’s largest defence exporter and shipbuilder. The company owns shipyards in Australia, the US, Philippines and Vietnam with service centres worldwide, including the Middle East.

Furthermore, it has grown to become the world’s largest aluminium shipbuilder and is Australia’s largest defence exporter.

More reading

• Why Austal, Challenger, Orocobre, & Whitehaven Coal are dropping lower
• Why is the Austal (ASX:ASB) share price on the move?
• Top brokers name 3 ASX shares to buy today
• Potential ASX winners from government’s $1.5bn manufacturing blueprint

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 Austal Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coca-Cola Amatil Ltd (ASX: CCL) share price outperformed on Thursday on speculation that it’s about to make a sizable acquisition.

The CCL share price jumped 2.8% to a seven-month high of $10.75. In contrast, the S&P/ASX 200 Index (Index:^AXJO) shed 0.3% of its value.

The beverages group may have found favour for its relatively defensive business model during a risk-off day.

After all, the Treasury Wine Estates Ltd (ASX: TWE) share price and Woolworths Group Ltd (ASX: WOW) share price held up better than most.

COVID leaves CCL share price tasting flat

But that’s only a small part of the story. I believe investors got excited on an Australian Financial Review report that CCL is readying to lob a bid for some of Asahi’s assets.

There’s nothing like merger and acquisition (M&A) action to get the blood pumping. Despite selling staple products, the COVID‐19 panic hasn’t played out in CCL’s favour.

A big driver for demand for its drinks come from dine-in consumers. With cafes and restaurants forced only offer takeaway during social restrictions, sales have been as appetising as flat Coke.

Coca-Cola Amatil share price regains fizz on M&A

But Coca-Cola Amatil is hoping to turn its fortunes around with a substantive acquisition. It appears that the group tested the appetite of its biggest shareholders for a capital raising to help fund a possible transaction.

The AFR reported that Macquarie Group Ltd (ASX: MQG) is riding beside Coca-Cola Amatil and would underwrite the sale of new shares.

Coca-Cola Amatil is leaving all options open. It’s considering funding any asset purchase via debt or using a mix of debt and equity.

Asahi acquisition details

The ASX group is one of two known bidders for Asahi’s portfolio, which includes a handful of beer and cider brands. The other keen suitor is reported to be global beer giant Heineken.

Asahi has to divest brands like Stella Artois, Beck’s and Strongbow to get regulatory clearance for its takeover of Carlton & United Breweries.

Will Coca-Cola Amatil undertake a rare capital raise?

Investors don’t get many chances to participate in a capital raise with Coca-Cola Amatil. The group has not sold new shares in decades.

Given that stuck-at-home Aussies are increasing their intake of alcohol to help overcome the worst economic crisis in living memory, I suspect any cap raise by CCL will be well received. This is particularly so in the current environment of cheap money and ample liquidity.

Speaking of which, it will probably be a lot cheaper for Coca-Cola Amatil to use debt to fund any purchases.

This is of course assuming lenders are willing to provide it with more debt. The group is already holding around $1.7 billion in net debt.

More reading

• ASX 200 recovered throughout today, but finished 0.3% lower
• Why Ardent Leisure’s (ASX:ALG) share price is up 46% from 28 September
• Broker updates are mixed on these 6 high profile ASX 200 shares
• ASX 200 down 0.75%: Big four banks drop, Healius hits record high, Zip slides lower
• Why the OZ Minerals (ASX:OZL) share price hit a 10-year high today

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 50 index isn’t as well-known as the S&P/ASX 200 Index (ASX: XJO), but it is arguably just as important.

The index is home to 50 of the largest companies on the Australian share market.

While not all the shares on the index are ones that I would recommend investors buy, there certainly are some quality options.

Two ASX 50 shares that I rate highly are as follows:

CSL Limited (ASX: CSL)

The first ASX 50 share I would buy is CSL. I think the biotherapeutics giant is a great long term investment option due to the quality of its CSL Behring and Seqirus businesses. CSL Behring is the biotech business behind immunoglobulins products such as Privgen and Hizentra, and haemophilia products Idelvion and Afstyla. Whereas the Seqirus business is the second-largest player in the influenza vaccines industry and is assisting with the development and manufacture of a COVID-19 vaccine.

Although the pandemic is causing headwinds for plasma collections and thus increasing the production costs of immunoglobulins, strong demand for flu vaccines looks set to offset this. So much so, CSL recently revised its FY 2021 earnings growth guidance range higher.

Beyond this year, I believe  CSL is in a strong position for growth thanks to its current product portfolio and its significant investment in research and development. In FY 2021, for example, CSL is expecting to invest approximately US$1 billion in its R&D activities. I expect this to ensure its pipeline remains full of potentially lucrative therapies and keeps the company at the top of the game over the long term. Overall, I think this makes it a must-buy for investors today.

Telstra Corporation Ltd (ASX: TLS)

The second ASX 50 share that I would buy is Telstra. After several disappointing years due to the NBN rollout, Telstra’s outlook is becoming increasingly positive. This is being underpinned by its T22 strategy, which is stripping out costs and simplifying its business.

Another big positive is the status of the aforementioned NBN rollout. While the rollout still has a bit longer to go, the headwinds it is causing are now peaking. In light of this, a return to growth doesn’t appear far away. Especially given rational competition in the industry and the arrival of 5G internet. The latter should be a big boost to the average revenue per user metric in its key Mobile segment.

Finally, with the Telstra board intending to do what it can to maintain its dividend, the company’s shares look set to yield very generous dividends in the coming years. Based on the current Telstra share price, I estimate that it offers investors a 5.8% fully franked dividend yield.

More reading

• 3 super reasons to buy ASX 200 shares today
• The ASX healthcare shares I would buy and hold until at least 2030
• Top brokers name 3 ASX shares to buy today
• Is the Telstra (ASX:TLS) share price undervalued?
• 5 things to watch on the ASX 200 on Wednesday

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Resapp Health Ltd (ASX: RAP) share price has stormed higher today following a positive announcement regarding its software.

During mid-afternoon, shares in the digital health company reached an intra-day high of 14 cents. Since then, the ResApp share price has slightly retreated to 12.5 cents, up 19%, at the time of writing.

What does ResApp do

ResApp is a digital health company that specialises in developing smartphone application for the diagnostics and management of respiratory diseases. Machine learning algorithms use sound to detect and measure a variety of breathing conditions, such as breathing, snoring and coughing.

What did ResApp announce?

ResApp advised it has built a new smartphone application which has been non-exclusively licenced to biotech company, AstraZeneca Japan.

Developed over the last 12 months, the cough counting application is designed to identify coughs and background noises in everyday settings. The software records the number of coughs from the user and uploads the data in a form of time and date stamps. This is then accessible to medical and healthcare professionals to monitor in real-time.

The company noted that cough frequency is a key factor in respiratory disease progression and management. Traditional methods such as self-reporting or listening to audio recordings are said to be costly, inaccurate and labour-intensive.

The software will be used in a clinical study to monitor patients who suffer from lung cancer.

What’s the deal?

Under the agreement, AstraZeneca will pay a monthly licence fee for each patient enrolled in the initial study. In addition, a monthly support fee for the duration of the study will also be included. The program is set to start early next year and will run for two years.

ResApp noted that the number of patients and the length of their participation remains uncertain. It does not expect to generate material revenue from the program.

Looking ahead, the company is confident that the new partnership will lead to future product applications. ResApp is currently seeking new opportunities to integrate its software into a range of hardware devices. Discussions with large industry customers are ongoing and the company will update the market in due course.

What did management say?

Welcoming the development, ResApp CEO and managing director Dr Tony Keating said:

To have our technology licensed by a company of AstraZeneca’s reputation is a major achievement and provides significant validation of ResApp’s products and capability. They have some of the world’s leading scientists and researchers running clinical trials and treatment programs and we are confident that their input will enhance our technology for future commercial applications and deployments.

ResApp continues to build a strong foundation of commercial partners and this agreement is another example of the company’s ability to attract industry leaders that can assist in rapid scale well into the future.

More reading

• The ResApp (ASX:RAP) share price is soaring 10% today. Here’s why.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The RPMGlobal Holdings Ltd (ASX: RUL) share price has dropped today despite the company announcing a new product. The mining software provider’s share price is currently trading 1.35% lower at a price of $1.09.

What’s new?

RPMGlobal introduced its newest integrated mine planning and scheduling product, Underground Potash Solution (UGPS). As the name suggests, it has been specifically tailored for the underground potash (potassium-bearing minerals or compounds) industry.

The product has been designed alongside a number of potash miners to address the unique challenges of their operations. It enables miners to utilise a single integrated mine planning and scheduling package. It can be used for design, reserving and scheduling (from strategic to short term).

RPMGlobal CEO Richard Mathews explained:

Unlike other 2D design tools on the market, UGPS undertakes detailed modelling of the potash deposit in 3D, creating a complete mathematical model of the mine. Moreover, users are able to import existing designs, create new designs or use a combination of both.”

Transition to SaaS

Midway through last week, RPMGlobal also announced the releasee of its first software-as-a-service (SaaS) offering. The product gives mining companies the capability to undertake haulage calculations in a cloud environment.

Importantly, the transition gives customers the flexibility to utilise multiple desktops. Under the new SaaS model, customers are able to write their own applications to interact with the program – Haulage as a Service (HaaS). 

Moreover, the calculation engine enables users or customer applications to undertake travel time calculations on demand.

About the RPMGlobal share price

The RPMGlobal share price has dropped today despite the product launch.

The mining consulting company was listed on the ASX in 2008 and is involved in the provision and development of mining software solutions, advisory services and professional development to the mining industry.

RPM boasts history stretching back to 1968. The company has been trusted by mining companies of all sizes and commodities to support their growth.

More reading

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• Crown Resorts (ASX:CWN) share price edges upward after AGM results
• What to expect from the ANZ Bank (ASX:ANZ) full year result next week
• Why the Carbon Revolution (ASX:CBR) share price soared 14% higher today
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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 RPMGlobal Holdings. The Motley Fool Australia has recommended RPMGlobal Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) finished today lower by 0.3% to 6,174 points, however it was actually down around 1.2% earlier in the day.

Here are the highlights from the ASX today:

Westpac Banking Corp (ASX: WBC) and Zip Co Ltd (ASX: Z1P)

Westpac announced yesterday that it was going to sell its 10.7% stake in Zip through a fully underwritten bookbuild to institutional investors.

The offer price for the shares was $6.65, which equated to a discount of around 6% to the last closing price.

The major ASX bank said that this decision reflected Westpac’s approach to simplifying its business and ensuring the efficient use of capital. The sale will add around 8 basis points to Westpac’s CET1 capital ratio.

Westpac chief information officer Gary Thursby said: “Larry Diamond, Peter Gray and the management team of Zip have done a tremendous job growing the company, including expanding globally. We look forward to seeing them continue to grow a global customer franchise.

“We are continuing to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our mobile banking apps across Westpac and our regional bank brands. This would expand our offering to customers and broaden the customers Zip can reach.

“We are also working with Zip on other opportunities for consumer, business and corporate customers that we believe could be mutually beneficial, while continuing to develop our banking relationship with Zip.”

Today, Westpac confirmed the sale went ahead, the Westpac share price dropped 1%. But the Zip share price fell 5% in reaction – it was one of the worst performers in the ASX 200.

Australian Pharmaceutical Industries Ltd (ASX: API)

API reported its FY20 result today to investors.

The pharmacy business reported that its total revenue rose by 0.2% to $4 billion. However, there was a shift away from higher margin products to value products which hurt profitability.

Underlying earnings before interest and tax (EBIT) fell 40.1% to $56.3 million and underlying net profit after tax (NPAT) dropped 42.6% to $32.5 million.

Reported EBIT was $4.4 million and it saw a net loss of $7.9 million after writing down the value of the Soul Pattinson Chemist brand name by $37.5 million (pre-tax) as well as including $12.3 million of post-tax tax relating to restructuring and reorganising.

API said that half of its revenue came from its retail businesses, so it was exposed to the impact of the mandatory lockdowns of non-pharmacy Priceline stores and Clear Skincare clinics. Pleasingly, Clear Skincare has performed very well in the states that have reopened and it continues to invest in new clinics.

As part of its cost reduction program, it closed two distribution centres which reduce its cost of doing business to 10.2%, a reduction of 70 basis points.

The API board decided to declare a dividend of 2 cents per share, representing a payout ratio of 33% of underlying net profit.

AMP Limited (ASX: AMP) suffers again

The AMP share price was one of the worst performers in the ASX 200 today after dropping around 5.5% in reaction to its third quarter update.

Australian wealth management (AWM) assets under management (AUM) increased by 0.3% to $121.4 billion, supported by improved investment markets.

However, AWM suffered net cash outflows of $1.95 billion (broadly flat compared to last year). The North platform achieved $818 million of net cash inflows.

AMP Capital AUM fell by 0.4% to $189.2 million after seeing net external cash outflows of $1.1 billion due to redemptions.

AMP Bank deposits rose by $52 million to $17 billion, though the total look book decreased by $303 million to $20.6 billion.

The AMP portfolio review continues alongside its transformation strategy to rejuvenate the business.

More reading

• Why Ardent Leisure’s (ASX:ALG) share price is up 46% from 28 September
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• ASX 200 down 0.75%: Big four banks drop, Healius hits record high, Zip slides lower
• Why the OZ Minerals (ASX:OZL) share price hit a 10-year high today
• Why the Australian Pharmaceuticals (ASX:API) share price is lower 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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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