The Mosaic Brands Ltd (ASX: MOZ) share price crashed a whopping 21.32% earlier today following the release of its FY20 results. The company owns fashion retailers Noni B, Rivers, Rockmans and Katies.

FY20 results

Mosaic Brands announced an underlying loss before interest, tax, depreciation and amortisation (EBTIDA) of $45.8 million for FY20. It includes a provision for occupancy costs of $49 million. This could be lower as negotiations with landlords are ongoing.

The result is before a non-cash impairment of $113.5 million relating to brand names, goodwill and right of use assets.

Additionally, earnings have been materially impacted by the recent bushfires and the coronavirus pandemic. 

However, Mosaic Brands is experiencing strong and accelerating online digital department store sales of $93.7 million. In 2H20, online sales growth was 35.9% and this trend continued into July with 40% sales growth. 

What does this mean for the retail rental market

Mosaic Brands CEO Scott Evans said Australia’s retail rental market had not just been paused because of the pandemic – it was “fundamentally changed”. He went on to say:

Some, though not all, landlords accept that reality, so while exact locations and numbers are to be determined, the Group anticipates potentially 300-500 store closures over the coming 12-24 months. Shuttered stores work for no one so we aim to minimise closures, but not on uncommercial terms.

The FY20 results follow reports of Scentre Group’s (ASX: SCG) Westfield locking out Noni B stores due to an ongoing rent dispute induced by the coronavirus pandemic. 

As a result, Mosaic Brands is continuing its online strategy by investing in its online digital department store strategy which saw growth in total digital sales to $93.7 million. 

Additionally, Mosaic’s acquisition of a 50.1% interest in Ezibuy has made progress in its turnaround plans including reducing costs and improving inventory. It will review options regarding the remaining 49.9% over the coming months due to the strategic benefits it brings.

Outlook for the Mosaic share price

Traffic and sales in July 2020 remain substantially below the prior year. However, recent actions and focus on margin have delivered comparable store margin growth for the month. Additionally, a further $18 million in savings is expected to be realised, net of Jobkeeper benefits. 

Despite the challenges, the company has remained optimistic with the group positioned to return to sustainable profitability in FY21, subject to no more material disruptions caused by the pandemic. This return will hopefully be reflected in the Mosaic share price, which has a long way to climb after today’s crash. The Mosaic share price is trading at 0.54 cents at the time of writing, a 19.85% decline.

Understandly, the board has decided not to declare a dividend for the financial year.

More reading

• The latest ASX stocks that brokers just upgraded to “buy”
• The Scentre Group share price is up today. Here’s why
• Why Afterpay, BINGO, Scentre, & Westpac shares are charging higher
• 2 ASX 200 bargains to buy this week
• Fortescue and 2 more ASX 200 shares to watch this week

Motley Fool contributor Matthew Donald owns shares of Scentre Group. The Motley Fool Australia has recommended Scentre 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 Afterpay Ltd (ASX: APT) share price is rocketing again today, up 7.39% in late afternoon trading. That puts Afterpay’s share price gains at 28.4% so far in August, and the share price is up a smashing 188% since 2 January.

If you’d bought shares of Australia’s buy now, pay later (BNPL) darling on the 23 March low, following the COVID-19 market rout, your Afterpay shares would have gained 888%.

Afterpay is an S&P/ASX 200 Index (ASX: XJO)-listed company. By comparison, the ASX 200 is up 35% from its 23 March low.

What does Afterpay do?

Afterpay is an Australian incorporated technology company and a leader in the BNPL market. Afterpay’s payment platform allows consumers to purchase and receive goods and spread the cost of their purchase out over equal payments, without any interest fees.

The company was founded in 2015 and commenced trading on the ASX in June 2017. These days, the company operates in Australia, the United States and the United Kingdom, with current expansion plans into the wider European market.

Why is the Afterpay share price up 7% again today?

Afterpay received a welcome boost in today’s trading (as if it needed one) after 3 brokers raised their target prices for the company’s shares.

Afterpay’s acquisition of Spanish BNPL start-up Pagantis appears to be a savvy move to expand its operations into the wider European market.

Morgan Stanley raised its target for Afterpay to $106 per share. That’s more than 19% above Afterpay’s current share price of $88.84.

Wilson’s also increased its price target from $60.49 to $94.16, and upgraded its rating from market weight to overweight.

As quoted by the Australian Financial Review (AFR), Wilson’s analyst Cameron Halkett stated:

We previously held reservations around Afterpay’s ability to ward off strong global competitors, and endure the systemic upheaval of COVID-19 on end-customer repayment ability. To date, these concerns have yet to materialise, and rather than focusing on what could go wrong, we take a fresh view of what has, and what could continue to go right.

Wilsons forecasts Afterpay will be profitable in FY22.

Bell Potter joined the broker cheerleading, raising its price target from $92.50 to $96.70.

Analyst Lafitani Sotiriou said (as quoted by the AFR):

Pagantis brings important payment infrastructure and knowledge, licences and 69 full-time equivalent staff to get the Clearpay brand launch ready for early next calendar year. This is a familiar way Afterpay enters a new market by finding a local knowledge base or partner, and building its business from there.

Following on its market-leading success in Australia and its penetration into the US markets, the recent Afterpay share price gains indicate the market believes this company has a lot of growth potential still ahead.

More reading

• The latest ASX stocks that brokers just upgraded to “buy”
• Leading brokers name 3 ASX shares to sell today
• This rising sentiment is spurring the share market’s bull run
• ASX 200 up 0.7%: Big four banks storm higher, Blackmores disappoints, Xero acquisition
• Why Afterpay, BINGO, Scentre, & Westpac shares are charging higher

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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Given the outlook for inflation and recent economic data, it looks very unlikely that the cash rate will be increasing any time soon.

This means that the paltry interest rates on offer with savings accounts look unlikely to be improving for some time to come.

In light of this, if I had $5,000 sitting in a bank account, I would put it to work in the share market where the potential returns are vastly superior.

But which ASX shares should you buy? Here are two top ASX shares which I think could provide strong returns for investors over the coming years:

a2 Milk Company Ltd (ASX: A2M)

I think a2 Milk Company would be a good option for a $5,000 investment. The fresh milk and infant nutrition company has been an exceptionally strong performer in recent years thanks largely to strong demand for its infant nutrition products in China. This certainly was the case in FY 2020, with a2 Milk delivering a 32.8% increase in revenue to NZ$1,730 million and a 34.1% lift in net profit after tax to NZ$385.8 million.

Pleasingly, I don’t believe its strong growth in the lucrative market is anywhere near ending. Management revealed that the company had just a 2% value share of the mother and baby store market in the country at the end of June. I believe it can grow its market share materially over the next decade thanks to its strong brand and product differentiation. In addition to this, the company has a very strong cash balance of NZ$854.2 million which can be used for value accretive acquisitions. In fact, just last week it announced its plan to acquire a 75.1% stake in Mataura Valley Milk.

Altium Limited (ASX: ALU)

The second share to consider investing $5,000 into is this electronic design software company. The key product in its portfolio is Altium Designer, which has exposure to the rapidly growing Internet of Things and artificial intelligence markets. These two markets are underpinning the proliferation of electronic devices globally and look set to drive strong demand for Altium Designer and its newly released cloud-based Altium 365 offering over the coming years.

Management certainly believes this will be the case. It remains confident the company will achieve its target of US$500 million in revenue, 100,000 subscriptions, and market domination later this decade. This compares to revenue of US$189 million, ~50,000 subscriptions, and market leadership in FY 2020. Due to the quality of its offering, I’m very confident it will get there. This could make the Altium share price a market beater over the next decade.

More reading

• 3 big surprises from the a2 Milk Company full year results
• Is the Altium share price in the buy zone?
• Leading brokers name 3 ASX shares to buy today
• Could these 2 ASX growth shares that crashed last week be a buy?
• 2 of the best ETFs for investing in ASX shares

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 Altium. The Motley Fool Australia owns shares of A2 Milk. 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 People Infrastructure Ltd (ASX: PPE) share price has been on form on Tuesday and is storming notably higher.

The leading workforce management company’s shares are currently up over 8% to $2.64.

How did People Infrastructure perform in FY 2020?

For the 12 months ended 30 June 2020, People Infrastructure delivered a 34.5% increase in revenue to $374.2 million. This was despite the company’s customer base being impacted greatly by the pandemic during the second half.

Pleasingly, the company was able to expand its normalised earnings before interest, tax, depreciation and amortisation (EBITDA) margin during the year to 7.1% from 6.4% in FY 2019.

This led to the company’s normalised EBITDA growing at an even quicker rate of 49.2% to $26.4 million. This was 7.8% higher than its most recent guidance for FY 2020.

On the bottom line, People Infrastructure’s normalised net profit after tax and before amortisation (NPATA) came in 53.3% higher year on year at $18.4 million. On a per share basis, this came to 20.5 cents.

Another positive was its strong operating cash flow generation during the year. People Infrastructure recorded operating cashflow of $27.1 million, which led to it finishing the period with a cash balance (net of debt) of $9.9 million.

This allowed it to declare a fully franked final dividend of 4.5 cents per share.

Management commentary.

People Infrastructure’s Managing Director, Declan Sherman, appeared to be pleased with the company’s performance given the challenges it faced.

He said: “People Infrastructure confronted a number of challenges in FY20 due to the impact of Covid-19. Whilst the business was immediately impacted at the outset of the first wave of Covid-19, it has shown tremendous resilience to bounce back strongly over the last few months. As a result, we are pleased to announce an increase in earnings in FY20 and strong cashflow generation throughout the year.”

Outlook.

No guidance has been given for FY 2021, but management appears positive on its growth prospects in the future.

Mr Sherman said: “Looking forward into FY21, whilst we are aware that the economic and operational uncertainty relating to Covid-19 may have implications for our clients, we continue to focus on driving growth in niches where we can demonstrate a clear point of difference in our product and services offering. We continue to look at both the opportunity to grow organically into new sectors as well as acquisition opportunities that would expedite that growth.”

In respect to acquisitions, the company notes that its balance sheet gives it the opportunity to complete $80 million to $90 million in acquisitions with funding through debt and free cashflow.

More reading

• 3 ASX shares to buy and hold through COVID-19
• 3 exciting small cap ASX shares to watch in FY 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended People Infrastructure 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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There’s value still left to be uncovered in this raging bull market as leading brokers just upgraded these ASX stocks to “buy”.

The run-up in the market is fuelled by a better than expected August profit reporting season. The S&P/ASX 200 Index (Index:^AXJO) improved 0.3% in afternoon trade to take its gain for the month to an impressive 3.8%.

Upgrade to buy before gap closes

If this is putting you in a buying sort of mood, the Healius Ltd (ASX: HLS) share price may be one to put on your watchlist. Goldman Sachs upgraded the stock to “buy” as it’s trailing its rival Sonic Healthcare Limited (ASX: SHL).

“Whilst HLS is tracking behind SHL in its domestic recovery, the majority of the shortfall is a function of regional exposure,” said the broker.

“As and when current restrictions begin to ease in the state of Victoria, we expect momentum in Pathology to improve (we estimate base volumes already tracked around flat in July).

“A resumption of elective surgeries should drive a sharp recovery for Imaging, in-line with peers.”

Further, the increase in COVID-19 testing around the country to contain new outbreaks of the pandemic is another big positive for Healius.

Goldman’s 12-month price target on the stock is $3.66 a share.

Latest ASX property stock on buy list

Meanwhile, the UBS upgraded the Aventus Group (ASX: AVN) share price to “buy” from “neutral” following its results.

The retail landlord is outperforming its peers as Large Format Retail (LFR) properties are proving to be more resilient to COVID-19’s impact compared to conventional malls.

The group posted a 4.2% rise in FY20 funds from operations to $100 million, which is slightly ahead of the $98.5 million UBS was expecting.

Better shopping experience

Don’t thumb your nose at the small beat. The results stand in contrast to others in the sector with Scentre Group (ASX: SCG) reporting a $3.6 billion interim net loss. It won’t help that the nation’s Westfield malls owner is going to war with its tenants over rent.

In contrast, Aventus looks like it’s in retail bliss and UBS lifted its price target on the stock to $2.50 from $1.65 a share.

“We think the valuation reflects resilience of income of LFR assets, strong foot traffic, low rents/high cap rates (avg $325m psm/6.7% cap rate) and benefits from changes in household spending patterns,” said the broker.

UBS is forecasting a 12-cent dividend from the group in FY21, which will put the stock on a yield of around 5.3%.

More reading

• Mosaic Brands share price crashes on FY20 results
• Afterpay share price leaps 7% today after 3 broker upgrades
• The Scentre Group share price is up today. Here’s why
• ASX 200 up 0.7%: Big four banks storm higher, Blackmores disappoints, Xero acquisition
• Why Afterpay, BINGO, Scentre, & Westpac shares are charging higher

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT, Scentre Group, and Sonic Healthcare 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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Recent research from analysts at noted broker Wilson’s has painted a bullish outlook on 5G Networks Ltd (ASX: 5GN) shares. According to the report, 5G Networks is poised to emerge as a winner from the COVID-19 pandemic with multiple revenue drivers expected to fuel growth in the short and longer-term.

How has 5G Networks performed?

5G Networks recently released its financial report for FY20.

According to analysts, FY20 can be interpreted as a transition year for 5GN, with the company moving from lower margin products and services and focusing on high margin initiatives.

Highlights from 5G Networks’ report included revenue for FY20 of $49.3 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) more than doubling to $6.6 million. In terms of revenue, the company reported a 16% growth in recurring revenue and 700% increase in operating cash flow.

5G Networks cited a number of key developments in FY20 for the company’s solid performance. These included key acquisitions of data centre services and migration of its product mix. According to 5G Networks, these developments have positioned the company to meet growing demand for cloud-based services. The company also noted its strong cash position of $23.5 million, which will allow it to pursue future acquisitions.

Although the company’s revenue line slightly missed expectations, analysts are still bullish on their outlook for 5G Networks.

Why are analysts bullish on 5G Networks shares?

Analysts from Wilson’s elaborated on their ‘Overweight’ rating on 5G Networks and cited several factors.

Firstly, analysts believe that the company has genuine short and longer-term revenue drivers. In the short-term, increased demand for cloud-based services and migration to the ‘cloud’ are tipped to drive revenue growth. In the longer term, revenue drivers include ongoing digital transformation programs and the increasing need for ICT security among businesses.

There are also strong profit drivers for 5G Networks, with primary revenue driven by new customer wins, operating leverage and synergies from acquisitions. Analysts also cited 5G Networks’ revenue quality improving with recurring revenue expected to increase, allowing for a growing revenue base.

Lastly, analysts cited 5G Networks’ consolidated offerings, which encompass a wide variety of software and hardware solutions. The launch of its Cloud Federation Platform earlier this year is also expected to accelerate 5G Networks’ expansion.

Foolish takeaway

Unlike many companies this reporting season, 5G Networks provided investors with guidance for FY21. The company forecasts revenue between $60 million and $65 million and EBITDA between $8 million and $8.5 million.

Personally, I agree with the bullish outlook from analysts at Wilson’s. With more people likely to be working from home post-pandemic and consumers transitioning to cloud-based platforms, the outlook for 5G Networks looks promising.

The positive outlook has been reflected in the company’s share price, which is currently trading near all-time highs. I think a prudent strategy would be to buy a small parcel of 5G Networks shares and build on holdings in the longer-term.

More reading

• My top 5G ASX share to buy right now
• 5G Networks share price falls 6% on FY20 results
• Why 5G Networks and these ASX shares just hit record highs

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK 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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2020 has been a watershed year for ASX dividend shares. Former dividend stalwarts like the big ASX banks, Transurban Group (ASX: TCL) and Ramsay Health Care Limited (ASX: RHC) have slashed, deferred or cancelled their prized dividend payouts already this year. More companies look set to follow. So where are dividend investors to turn in this Brave New World? Well, I’ve found 3 ASX dividend shares that have already not just reconfirmed their dividends in 2020, but have increased them. That’s a good start! 

3 ASX dividend shares increasing their payouts in 2020

1) Fortescue Metals Group Limited (ASX: FMG)

Fortescue has been a pillar of strength in the current dividend scene. Just yesterday, the company announced a final dividend of $1 per share. That means shareholders have received $1.76 per share in dividends for FY2020, which represents a 54% increase over FY19’s payout. That’s what a company can do when it is able to dig a tonne of iron ore out of the ground for US$12.94 and sell it for US$120 (the rough price of iron ore today). If iron ore prices stay even close to their current levels, Fortescue should be able to keep this train going in FY21 as well. With a dividend of $1.76 per share, Fortescue Metals is offering a trailing yield of 9.45% on current prices.

2) APA Group (ASX: APA)

APA is in the business of providing pipelines for gas distribution. It owns the largest gas pipeline network on the east coast of Australia and is responsible for delivering around half of the country’s total gas needs. The great thing about this kind of business is its predictability and defensive nature. Regardless of recessions or pandemics, we all need gas all of the time, whether it’s for industrial purposes or just cooking and heating our homes. APA’s next dividend will be paid on 16 September and will come in at 27 cents per share. That’s a nice increase from last year’s final dividend of 25.5 cents per share. On current prices, that gives APA shares a trailing 12-month yield of 4.61%.

3) Rural Funds Group (ASX: RFF)

Our final dividend share is this agricultural real estate investment trust (REIT). Rural Funds invests in farmland, which it rents out to clients for rental returns. Given the extremely defensive nature of farmland (we all need to eat), Rural Funds is able to give its investors a reliable stream of dividend distributions, which it aims to increase by 4% annually. 2020 has not been an exception to this rule with Rural Funds delivering a 4% increase for its 2020 payout to 10.85 cents per share. Just this morning, the company also announced a forecast of an 11.28 cents per share payout for FY2021. That takes confidence in this era of uncertainty and gives me assurance in this business as a solid income payer going forward.

More reading

• Leading brokers name 3 ASX shares to sell today
• Rural Funds share price rises on FY20 results
• ASX 200 rises 0.3%, Afterpay up on European plans
• ASX 200 up 0.2%: Afterpay expansion, Fortescue’s monster dividend, NIB disappoints
• Why Afterpay, Bubs, Fortescue, & Zip Co shares are charging higher

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of APA Group and Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care 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 NZME Ltd (ASX: NZM) share price has rocketed 41% higher after the media company revealed a 217% increase in profits. NZME gave a stronger than expected performance in 1H 2020, having quickly navigated the impacts of COVID-19. 

What does NZME do? 

NZME, which stands for New Zealand Media and Entertainment, is an integrated media company with a portfolio of newspapers, radio stations, and digital platforms. With its content accessed by more than 3.2 million Kiwis, NZME offers advertisers the opportunity to access its audience via a fully integrated multi-platform presence. 

What did NZME report? 

NZME released its results for 1H 2020 this morning, reporting 5% growth in operating earnings before interest, taxes, depreciation and amortisation (EBITDA) which reached NZ$28.9 million.

Although NZME’s operations are deemed an essential service, key revenue streams were significantly impacted by COVID-19. Advertising revenue fell 47% in April, 39% in May, and 23% in June. This led to a 17% decline in segment revenue for the half, which fell to $147.3 million. Operating revenue fell 13% to NZ$157.8 million, including an NZ$8.6 million government wage subsidy during the half. 

NZME took swift action to mitigate impacts of the downturn on profitability and cash flow, contributing to a NZ$24.6 million reduction in operating expenses. This flowed through to a 66% increase in operating net profit after tax (NPAT), which increased to NZ$6.8 million. Statutory NPAT increased by an impressive 217% to NZ$3 million, up from $0.9 million in 1H 2019. 

Although some actions taken in response to COVID-19 were temporary, NZME expects to achieve a permanent reduction in cost base. Costs were decreased by NZ$24.6 million in the first half, with approximately NZ$7 million relating to permanent cost reductions. The annualised permanent reduction in cost base is expected to be NZ$20 million per annum. NZME reduced net debt by NZ$19.5 million to NZ$55.2 million in 1H 2020. Debt reduction is expected to be lower in the second half, however, as net working capital is expected to grow. 

What’s the outlook for NZME? 

NZME says it has seen a stronger than anticipated recovery from COVID-19, but remains cautious regarding the future economic environment. Advertising revenue is expected to be down 16% in 3Q 2020 so cost containment remains a focus.

NZME is currently forecasting FY20 operating EBITDA of NZ$60–$63 million. Based on improvement in economic conditions, COVID-19 recovery, and permanent cost reduction, NZME is expecting profit growth in 2021. Based on this outlook and the company’s capital requirements, the company advised its board expects to be able to consider a dividend payment after 30 June 2021.  

The NZME share price is currently sitting at 39 cents per share, which is down 21% on this time last year.

More reading

• Analysts think 5G Networks shares could be a post-COVID-19 winner
• 3 ASX dividend shares that have increased their payouts in 2020
• AUB Group share price storms higher on strong profit and dividend growth
• Pro-Pac Packaging share price leaps 6% higher on FY20 results and dividend news
• The 1 Warren Buffett quote that tells us how to invest right now

Motley Fool contributor Kate O’Brien 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 AUB Group Ltd (ASX: AUB) share price has been a strong performer on Tuesday following its full year results release.

At the time of writing the shares of the insurance broker network are up 4.5% to $14.13.

How did AUB perform in FY 2020?

AUB was a positive performer in FY 2020 despite the pandemic and reported solid top and bottom line growth.

For the 12 months ended 30 June 2020, the company delivered a 9.2% increase in revenue to $335.36 million. This was driven by strong growth in its Australian Broking and New Zealand segments over the period.

Things were even better on the bottom line, with AUB delivering its strongest profit growth in seven years. It posted underlying net profit after tax of $53.4 million for FY 2020. This was up 15.2% on the prior corresponding period and ahead of its guidance. Underlying earnings per share came in at 72.45 cents.

In light of this strong performance, the AUB board declared a final fully franked dividend of 35.5 cents per share. This was an increase of 9.2% on the prior corresponding period. It means that for the full year, AUB will be paying a 50 cents per share fully franked dividend. This is up from 46 cents per share in FY 2019.

“Resilient and defensive”.

AUB Group’s CEO and Managing Director, Michael Emmett, was very pleased with the company’s performance in FY 2020 given the challenging economic environment.

He commented: “I am extremely pleased to report our FY20 results, the strongest year on year growth results for the Group in 7 years.”

“Despite a challenging external market environment with significant headwinds for our clients and insurance partners, AUB Groups’ portfolio has proven to be resilient and defensive, delivering a strong result while maintaining a consistent focus on our FY20 Execution Priorities that enhance our underlying growth drivers. FY20 was also a year of significant change for the business and I’m excited by the response from the partnership and our underwriting partners,” he added.

FY 2021 outlook.

The good news for shareholders is that management expects its strong form to continue in FY 2021. In fact, it has upgraded its guidance for FY 2021 with today’s release.

It is now forecasting underlying net profit after tax of $58.5 million to $61 million in FY 2021. This represents growth of 9.5% to 14.2% year on year. This is expected to be driven by Australian premium increases in the range of 5% to 6% and small bolt on acquisitions.

More reading

• Analysts think 5G Networks shares could be a post-COVID-19 winner
• 3 ASX dividend shares that have increased their payouts in 2020
• ASX stock of the day: NZME share price rockets 41% higher as profits jump more than 200%
• Pro-Pac Packaging share price leaps 6% higher on FY20 results and dividend news
• The 1 Warren Buffett quote that tells us how to invest right now

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. 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 Pro-Pac Packaging Limited (ASX: PPG) share price has leapt higher today following the company’s announcement of its FY20 results. The Pro-Pac Packaging share price climbed 18.75% in early trade but, at the time of writing, has pulled back to a more modest gain of 6.25% 

Pro-Pac is a flexibles, industrial and rigid packaging company with a diversified distribution and manufacturing network throughout Australia and New Zealand.

How did the company perform?

The company was pleased to announce statutory net profit of $6.6 million for FY20. It also delivered sustainable improvements in working capital and a 44.4% reduction in net debt to $46.1 million.

Pre-AASB16 (the accounting standard for leases), earnings before interest, taxation, depreciation and amortisation (EBITDA) was 15.4% higher to $32.4 million compared to the prior corresponding period (pcp).

Revenue of $478.2 million was down 1.6% on the pcp as a result of shifting the business mix towards high margin products. However, it was offset by lower revenue levels from the industrial division.

Pleasingly, Pro-Pac Packaging was able to reinstate a fully franked dividend of 0.4 cents per share. 

In March, the group announced the successful refinancing of its senior debt facility for a further 3 years.

“Proud”

That’s the word Pro-Pac CEO and Managing Director Tim Welsh used to comment on the FY20 results. He said “I am proud of how the Pro-Pac team has continued to focus on our growth objectives and delivered a set of strong financial results despite the ongoing challenges of the COVID-19 pandemic,”

“The significant improvement in our balance sheet and our focus on driving growth though operational excellence delivers a strong foundation for Pro-Pac to become an industry leader in the manufacturing and distribution of packaging products,” he concluded.

Outlook

Pro-Pac Packaging describes FY21 as a year of consolidation, as it delivers on critical transformational projects that will drive a step change in its cost base in FY22 and beyond. The company also highlighted the importance of this transformation to its manufacturing capability and ability to address new markets. 

Key objectives for the coming 12 months include transitioning production from Pro-Pac’s Chester Hill Facility and the delivery of the enterprise resource planning (ERP) project to enable business rationalisation and efficiency.

Pleasingly, the company has advised the first two months of FY21 have started well and carried forward the positive momentum from FY20. It has advised a business update will be provided at the annual general meeting (AGM) in November.

About the Pro-Pac Packaging share price

The Pro-Pac Packaging share price is currently trading at 17 cents per share which is 183% higher than its March low. The Pro-Pac share price has increased nearly 42% in year-to-date trading. 

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Motley Fool contributor Matthew Donald 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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