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The Carsales.com Ltd (ASX: CAR) share price is back in the green after opening more than 2% lower on Monday.

The S&P/ASX 200 Index (ASX: XJO) tech share closed on Friday trading for $22.54. Shares are currently changing hands for $23.18, up 2.8%.

This comes after Carsales – the largest online automotive, motorcycle and marine classifieds business in Australia – released its results for the half year ended 31 December (H1 FY23).

Carsales share price gains on revenue boost

• Pro-forma revenue of $388 million, up 15% from the prior corresponding period (pcp) 
• Pro-forma earnings before interest, taxes, depreciation and amortisation (EBITDA) of $211 million, up 17% from the pcp
• Adjusted net profit after tax (NPAT) increased 37% from the pcp to $122 million
• Adjusted earnings per share (EPS) came in at 34.9 cents, an increase of 14% from the pcp
• Declared a fully franked interim dividend of 28.5 cents per share, up from 25.5 cents per share in H1 FY22

(* Note: Pro-forma calculations assume 100% ownership of Trader Interactive in H1 FY22 and H1 FY23.)

What else happened over the half year?

In September, Carsales completed its acquisition of the remaining 51% of United States based, non-auto digital marketplace, Trader Interactive. The company said the performance of Trader Interactive during its first three months as the 100% owner was “very pleasing”.

The Carsales share price could also be getting a boost from the strength of its Australian business, reporting record private advertising results and double-digit growth in its dealer and media segments.

Double digit revenue and EBITDA growth were also achieved in its US and Korean businesses.

The company said demand over the six months was higher than pre-pandemic levels.

What did management say?

Commenting on the results helping lift the Carsales share price today, CEO Cameron McIntyre said:

The performance of the first half of FY23 has been exceptional for Carsales. The group delivered double-digit revenue and earnings growth demonstrating both a highly resilient business model with a track record of growth through the cycle as well as strong operating discipline…

We continue to ramp up the digitisation of vehicle buying and selling in all markets, integrating finance into our product portfolio. We are seeing excellent adoption of our digital trade-in products in Instant Offer and Dealer Direct.

What’s next?

Looking ahead to what may impact the Carsales share price over the coming months, the company said it expects to deliver “very strong growth” in adjusted revenue, adjusted EBITDA and adjusted NPAT in FY23.

Carsales also forecasts an expansion in its group adjusted EBITDA margin on both a pro-forma and actual basis in FY23.

“We are seeing good levels of consumer demand in our key markets and inventory is approaching pre-pandemic levels. This growth in inventory is driving demand for dealer premium and depth listings,” McIntyre said.

“This all gives us confidence that Carsales is in a strong position to deliver outstanding shareholder returns in FY23.”

Carsales share price snapshot

As you can see in the chart below, the Carsales share price has been a strong performer in 2023, up 12% year to date.

The post Carsales share price marches higher on profit and dividend boost appeared first on The Motley Fool Australia.

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• The Nasdaq just had its best January in over 20 years. Are ASX tech shares back?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Carsales.com. 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 All Ordinaries Index (ASX: XAO) is having a pretty lousy start to the week so far today. At present, the All Ords has lost 0.26%, putting it down to just over 7,610 points. But that’s nothing compared to the losses the Nuix Ltd (ASX: NXL) share price is suffering today.

Nuix shares are well and truly in the doghouse this Monday. The software analytics provider has crashed by a nasty 26.73% at the time of writing to $1.11 a share. That’s after the Nuix share price closed at $1.52 last Friday.

The company impressed investors only last week when it won a court case against its former CEO. Edward Sheehy was seeking up to $183 million in damages over a dispute from the issuance of options. But Nuix shares rocketed more than 40% when the Federal Court ruled in Nuix’s favour.

So what on earth is going on with Nuix that might have prompted such a dramatic revaluation from the market today?

Well, there’s been nothing new from the company itself.

But there is some speculation out today that Nuix might have lost a major client.

Nuix share price tanks amid ASIC speculation

According to reporting in the Australian Financial Review (AFR) today, the government’s corporate watchdog, the Australian Securities and Investment Commission (ASIC), is “expected to dump Nuix” from providing digital forensics and analytics services when the company’s contract is up for renewal next month.

ASIC is reportedly “keen to distance itself” from Nuix amid ongoing investigations into the company, including by ASIC itself.

It was only last September that ACIS announced that it was suing Nuix for breaching provisions of the ASIC Act and the Corporations Act.

It’s not just ASIC either, with other government departments such as the Australian Taxation Office (ATO) and the Australian Competition and Consumer Commission (ACCC) “likely to follow ASIC’s lead” in no longer requiring Nuix’s services.

So it could be this news that is rattling investors today. It’s arguably not a good look when government agencies are allegedly clamouring to find alternatives to a company’s services. Especially when the said company is the subject of investigations by those same entities.

Nuix has countered by telling the AFR that “its customer relationships remained strong” and that its customer churn rate, as of its November AGM, was 5.5%.

But clearly, investors have been rattled today.

Nuix is scheduled to report its half-yearly earnings results on Monday, 20 February so no doubt investors will be watching closely.

In the meantime, the Nuix share price is still up an impressive 70% in just 2023 to date. But Nuix shares remain down by more than 21% over the past 12 months.

The post Why did the Nuix share price just crash 27%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lynas Rare Earths Ltd (ASX: LYC) share price is having a tough start to the week.

In morning trade, the rare earths producer’s shares dropped as much as 8% to $8.06.

The Lynas share price has recovered a touch but remains down 7% to $8.14 at the time of writing.

Why is the Lynas share price under pressure?

The weakness in the Lynas share price on Monday has been driven by concerns over its Malaysian operations.

According to the Singapore-based The Straits Times, the Pakatan Harapan-led government in Malaysia plans to force Lynas to operate radiation-free at its advanced materials plant in The Gebeng Industrial Park by July.

The media outlet understands that Malaysian Prime Minister Anwar Ibrahim’s administration refused a request by Lynas to lift conditions for the three-year renewal of its licence, which expires in March.

An anonymous top government figure reportedly told The Straits Times:

The Cabinet has decided to reject the request. Lynas will no longer be allowed to produce radioactive waste in Malaysia.

The official also revealed that a full announcement by the Pakatan Harapan-led government.

This would be bad news for Lynas and could disrupt production at the plant. Especially with its new cracking and leaching facility in Western Australia unlikely to be ready before the Malaysian government’s deadline.

Lynas response

The company has released a response to the media speculation today, stating that it hasn’t been contacted by the Malaysia government, but that hasn’t been enough to stop the Lynas share price from falling. It commented:

Lynas Rare Earths notes recent media speculation regarding the conditions applicable to Lynas Malaysia’s operating licence renewal. At this time, the company has not been notified of any decision by the Malaysian regulator in this matter.

Investors will have to sit tight and wait to see if the Pakatan Harapan-led government releases an announcement later this month as the anonymous source suggested.

The post Lynas share price sinks 8% amid license concerns appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Scott Phillips.

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The Lendlease Group (ASX: LLC) share price is plunging on the back of the property and infrastructure group’s first-half earnings.

The stock has dropped 5.42% at the time of writing to trade at $7.85.

Here are the highlights of the group’s report:

Lendlease share price slumps amid $200m UK provision

• Core operating profit came in at $105 million – compared to $28 million in the prior comparable period
• Statutory loss after tax of $141 million – the pcp saw a $264 million statutory loss
• Operating earnings per share (EPS) of 15.2 cents – a 271% improvement
• 4.9 cents per share interim dividend declared – down from 5 cents per share in the pcp
• Funds under management lifted 8% to $48 billion
• Development pipeline grew to $121 billion

The group’s $141 million statutory loss for the period included a $200 million provision due to action by the United Kingdom government, the company said.

Industry-wide government action saw the period for defects liability extended from six years to 30 years, along with changes to building safety regulations for completed residential buildings.

The liability mainly relates to buildings Lendlease holds as a result of its 2005 Crosby acquisition.

What else happened last half?

The company’s bottom line was also dinted by a $39 million impact of property revaluations.

Meanwhile, Lendlease acquired Sydney’s One Circular Quay for $3.1 billion and its completions, including Sydney Place, came to $2.8 billion.

What did management say?

Global CEO and managing director Tony Lombardo commented on the news weighing on the Lendlease share price today, saying:

Notwithstanding the impact of the UK Government’s retrospective industry wide action on our statutory result, we achieved solid progress against our key operating metrics after successfully resetting the business.

Our global workplace assets comprise more than $25 billion in [funds under management] and are currently 95% occupied – reflecting our leadership in delivering and managing sustainable places and precincts where people want to be.

Going forward, our development work in progress of $18 billion puts Lendlease on track to achieve its target of $8 billion completions by financial year 2024.

What’s next?

The group expects to kick off $6 billion of work in the second half. That’s expected to include Sydney’s One Circular Quay and Los Angeles’ La Cienega.

It also tips its core operating earnings to improve in the second half but notes current market risks, including inflation and interest rates, are tempering the pace of recovery.

Outcomes for its three operating segments are likely to be towards the lower end of financial year 2023 guidance.

Its investments segment is expected to post a return on invested capital of 6% to 7.5% while that of its development segment is tipped to come in between 4% and 6%. Its construction segment is forecast to have an earnings before interest, tax, depreciation, and amortisation (EBITDA) margin range of 1.5% to 2.5%.

Lendlease share price snapshot

The last 12 months have been rough on the Lendlease share price.

It’s tumbled 21% during that time. For comparison, the S&P/ASX 200 Index (ASX XJO) has lifted 2% since this time last year.

However, this year has been stable for the stock so far. It’s currently 0.4% higher than it was at the start of 2023. Meanwhile, the ASX 200 has gained around 7% year to date.

The post Lendlease share price tumbles 5% on $141 million loss appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Star Entertainment Group Ltd (ASX: SGR) share price is having a day to forget.

In morning trade, the casino operator’s shares are down a massive 19% to $1.52.

This means the Star share price is down approximately 60% over the last 12 months.

Why is the Star share price crashing?

Investors have been selling down the Star share price on Monday after the company released a very disappointing earnings and guidance update.

According to the release, the company’s first half earnings have been impacted by operational changes arising from the Bell and Gotterson Reviews, a step-up in remediation costs, and increased competition in Sydney from Crown Sydney.

First half revenue grew 30% on pre-COVID levels for The Star Gold Coast and 9% for Treasury Brisbane, but fell 13.5% for The Star Sydney. This led to overall group revenue falling 1% on pre-COVID levels.

In respect to its ongoing remediation actions, Star revealed that it has continued to invest in improved compliance capabilities and incurred remediation costs of ~$20 million during the half. This includes a significant increase in headcount including the use of ‘surge’ third party consultants to improve compliance processes as it seeks to return to licence suitability.

In light of this, Star expects to report underlying EBITDA of $195 million to $205 million during the first half. Though, it is worth noting that this excludes provisions for fines and one-off legal costs which will be treated as significant items.

Full year guidance

Unfortunately, things aren’t expected to get any easier in the second half. In fact, its second half profits are expected to be softer half on half.

This is expected to lead to full year underlying EBITDA of $330 million to $360 million. This is based on the assumption that market conditions and the regulatory environment do not materially change.

Non-cash impairment

Star also revealed that it is writing down the value of its Sydney business due to operational changes implemented following the Bell Review, amendments to the NSW Casino Control Act, and the potential for an increase in NSW casino duty rates from FY 2024.

Management is anticipating a non-cash impairment charge in the range of $400 million to $1.6 billion in its half year results.

It notes that the high end of this range is based on the implementation of NSW casino duty rate increases as proposed by the NSW Government, whereas the low end of the range assumes no change in NSW casino duty rates.

Management commentary

Star’s CEO and Managing Director, Robbie Cooke, commented:

We have been pleased with the ongoing strength of trading across our Queensland based properties, while trading at The Star Sydney has been impacted by operational changes associated with the outcome of the Bell Review as well as competition from Crown Sydney

Whilst the outcome of recent regulatory and legislative developments remains uncertain, we have taken a prudent approach to assessing the carrying value of our assets, which has resulted in a non-cash impairment charge which will be recognised in our 1H FY23 results.

The post Why did the Star Casino share price just dive 19% to an all-time low? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Scott Phillips.

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It’s been a pretty disappointing start to the trading week for the All Ordinaries Index (ASX: XAO) so far this Monday. At the time of writing, the All Ords has lost 0.14% of its value, putting the index at just over 7,620 points.

But not all All Ords shares are having such a down day today. So let’s take a look at three All Ords shares that are making their investors very happy.

3 ASX All Ords shares bucking the market on Monday

Audinate Group Ltd (ASX: AD8)

Audio visual technology share Audinate is our first All Ords stock worth a look today. Audinate shares are tearing it up this Monday. The company is currently enjoying a massive 11.85% rise at present, putting the Audinate share price at $8.02 a share:

This comes after Audinate reported its half-year results for the first half of FY2023 this morning. As we covered this morning, the company reported an impressive 39.3% rise in revenues to US$20.6 million, while gross profits were up 30% to US$14.5 million. Clearly, investors have been delighted by what the company had to say.

HT&E Ltd (ASX: HT1)

Next up, we have All Ords media and advertising share HT&E. Here, There and Everywhere, the company formerly known as APN News and Media, has had no fresh news or earnings out today. But that didn’t stop the company’s shares from rocketing 10% to $1.32 apiece at one stage this morning. They’ve now settled 3.75% higher at $1.245 a share:

This could have something to do with speculation that HT&E could be the target of a takeover offer. According to reporting in The Australian, the company’s financials have spurred some potential suitors, including some private capital firms, to weigh up their options.

Helios Energy Ltd (ASX: HE8)

Finally today, we have the All Ords oil and gas hopeful Helios Energy. Helios shares are another ASX winner this Monday, with the company up a lucrative 8.59%, to 10.75 cents per share:

Helios hasn’t put anything new out today. However, ASX energy shares are collectively surging today, thanks to rising oil prices. As my Fool colleague flagged this morning, WTI crude rose 2.2% last Friday, while Brent crude was up 2.4% to US$86.52 a barrel.

Thanks to these gains in the oil markets, oil shares ranging from All Ordinaries small-cap players like Helios to giants like Woodside Energy Group Ltd (ASX: WDS) are putting on very pleasing performances.

The post 3 ASX All Ordinaries shares going gangbusters on Monday appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group. The Motley Fool Australia has positions in and has recommended Audinate Group. 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 Aurizon Holdings Ltd (ASX: AZJ) share price has landed on the unfavourable side of shareholders today following its first-half results.

In the first hour of trade, shares in the freight rail company are being exchanged at $3.43 — a 7% thumping. If Aurizon shares close around their current level today it will be their worst performance since 20 March 2020.

Aurizon share price suffers amid dismantled earnings

• Revenue up 12% compared to the prior corresponding period (pcp) to $1,694 million
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 7% to $673 million
• Net profit after tax (NPAT) down 34% to $169 million
• Interim dividend down 33% to 7 cents per share fully franked
• Above-rail coal volumes and network volumes down 8% and 2% respectively

The first half was a mixed bag, but ultimately the detractors prevailed.

Record grain haulage and the completed acquisition of One Rail meant Aurizon benefited from a strong result under its Bulk unit. This portion of the business contributed $521 million in revenue (up 51%) and $100 million in EBITDA (up 33%).

Meanwhile, the Coal unit weighed heavily on Aurizon’s EBITDA — contributing only $230 million, down 20% pcp. This subdued performance was attributed to a reduction in volume due to wet weather and lower contract rates.

What else happened in the first half?

During the first half, Aurizon announced the sale of its East Coast Rail business. The Aurizon share price rallied 4% on 16 December last year as shareholders were informed of the sale for $425 million in cash. It was stated that proceeds were initially used to repay debt.

Speaking of debt, Aurizon increased its debt by a total of $70 million during the half to fund its One Rail acquisition. The enlarged debt profile increased the company’s interest expense to $104 million.

What did management say?

Aurizon managing director and CEO, Andrew Harding, highlighted the major acquisition of One Rail during the period. The potential to expand into growing areas such as copper, lithium, and rare earths was noted by Harding.

Consistent with our strategy, we delivered strongly on key initiatives to diversify and expand the business in rapidly growing markets and regions. These were substantial steps in our aspiration to double the size of the Bulk business over the decade through organic growth and acquisitions.

Furthermore, the freight company’s CEO explained the challenges faced in the first half, stating:

These achievements were accomplished during a challenging period operationally, with prolonged flooding on the East Coast together with a number of significant third-party derailments and incidents that resulted in reduced volumes and revenue.

What’s next?

The Aurizon share price is likely feeling the effects of the company’s FY23 EBITDA guidance being reduced today.

Due to prolonged adverse weather, management is now forecasting group underlying EBITDA between $1,420 million and $1,470 million in FY23. This reflects a guidance cut of 4% compared to previous expectations.

Lower EBITDA from Coal and Network are the detractors in the forecast. Whereas, Aurizon is anticipating increased revenue and earnings under its Bulk banner.

Aurizon share price snapshot

Despite their blue-chip stature, Aurizon shares have not been the place to be so far in 2023. While the S&P/ASX 200 Index (ASX: XJO) has marched 6.7% higher year-to-date, the freight company’s shares have fallen 8.2%.

However, the company has provided its shareholders with an above-industry-average dividend yield. Currently, Aurizon is yielding around 5.8% before factoring in today’s interim payment.

The post Aurizon share price tumbles 7% as profits are derailed appeared first on The Motley Fool Australia.

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• 4 best ASX dividend shares to buy right now: expert

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon. 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 two ASX dividend shares I’m about to share could deliver enormous annual passive income for investors. With just a $10,000 investment, they can potentially each make dividend returns of more than $1,000.

If the dividend yield is at least 10%, then shareholders could get returns that are close to the S&P/ASX 300 Index (ASX: XKO) total return from just the dividend income.

Of course, dividends are not guaranteed. And normally there’s a reason that the dividend yield is so high. Typically, it’s a combination of a low price/earnings (p/e) ratio and a fairly high dividend payout ratio.

With interest rates currently rising and inflation biting into household finances, some ASX retail shares have been sold down. This could give investors the opportunity to snare some solid companies at lower prices and elevated dividend yields.

Even if the dividend is lower than forecast, the yield could still be above 10%, so we can see that there is a margin of safety.

Dusk Group Ltd (ASX: DSK)

Dusk is a retail company that specialises in exclusive home fragrance products designed in-house. It sells candles, ultrasonic diffusers, reed diffusers and essential oils, as well as fragrance-related homewares.

In the first 19 weeks of FY23, the ASX dividend share saw total sales growth of 23.9%, with stores now open after lockdowns. The business is opening new stores in Australia, expanding into New Zealand and benefiting from growth in its membership numbers.

Commsec forecasts that the annual dividend per share could potentially be 17 cents in FY23. At the current Dusk share price, that suggests the FY23 grossed-up dividend yield could be 13.5%.

With a $10,000 investment, that would generate $1,350 of annual passive income in year one.

Adairs Ltd (ASX: ADH)

Adairs is another ASX retail share. It sells homewares and furniture through its Adairs stores, Focus on Furniture stores and the Mocka brand.

The company has benefited from household demand for home improvement over the last few years.

That strong demand may not continue forever, but Adairs has seen growth in the first 16 weeks of FY23. Compared to locked-down COVID times at the start of FY22, total sales are up 45.5%, and sales excluding Focus were up 7.6%. This was thanks to consumer spending remaining “resilient”.

Adairs expects to open four to six new Adairs stores in FY23 and two to three new Focus stores. The ASX dividend share forecasts FY23 earnings before interest and tax (EBIT) to be between $75 million and $85 million.

On Commsec, the projection is that Adairs could pay an annual dividend per share of 18 cents with a grossed-up dividend yield of 11%.

With a $10,000 investment, that translates to an annual passive income of $1,100 in year one.

The post 2 ASX dividend shares that could generate $1,000 annual income with just $10,000 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Dusk Group. 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 Appen Ltd (ASX: APX) share price is taking a tumble, down 9.9% in Monday morning trade.

The artificial intelligence (AI) data services company saw its shares rocket last week, gaining 28% over the past four trading days. With no price-sensitive news out last week, that surge looks to have been driven by investor exuberance surrounding OpenAI’s ChatGPT.

But after Appen reported that it expects a significant non-cash impairment charge, investors are hitting the sell button today.

Why the impairment charge?

The Appen share price is under pressure after the company reviewed the value of cash generating units (CGU) and its assets. Following that review, the ASX tech stock said it expects to recognise a non-cash, pre-tax impairment charge of $204 million in its financial results for the year ended 31 December.

The company said the charge “reflects the impairment of goodwill and certain intangibles associated with the new markets (excluding China) CGU”. These are comprised of the Global Product, Enterprise, Government and Quadrant business units.

Also likely pressuring the Appen share price today is the company’s reduction in future revenue growth assumptions.

As the impairment is non-cash and a non-operating item, underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) and underlying net profits after tax (NPAT) won’t be impacted. And Appen highlighted that it found no indicators of impairment in its larger Global Services CGU.

Appen is scheduled to release its full-year results on 27 February.

The ASX tech stock said it expects to report revenue at the higher end of its guidance range of US$375 million to US$395 million. EBITDA is expected to come in at the lower end of the guidance range of US$13 million to US$18 million.

Appen share price snapshot

As you can see in the chart below, the Appen share price was enjoying a strong rebound in 2023. Even with today’s big slide factored in, the ASX tech share remains up 20% year to date.

The post Why is the Appen share price diving 10% on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen. 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 Scott Phillips.

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The Insurance Australia Group Ltd (ASX: IAG) share price is in the green in morning trade, up 3.18%.

The S&P/ASX 200 Index (ASX: XJO) insurance stock closed on Friday trading for $4.71 per share. Those shares are currently changing hands for $4.86 apiece.

This comes following the release of the company’s half-year results for the six months ending 31 December (1H FY23).

Read on for the highlights.

IAG share price gains on profit boost

• Gross written premium (GWP) of $7.06 billion, up 7.5% from 1H FY22
• Underlying insurance margin of 10.7%, down from 15.1% from the prior corresponding half year
• Net profit after tax (NPAT) leapt 171% year on year to $468 million
• Common equity tier 1 (CET1) multiple increased nine points to 1.11
• Declared a six cents per share (cps) dividend, 30% franked, in line with 1H FY22’s unfranked six cps dividend

What else happened during the half year?

The IAG share price could also be receiving some tailwinds after the insurer reported adding more than 100,000 direct customers across Australia and New Zealand over the six months.

Retention levels for motor insurance were 91% while home insurance retention rates were 95%.

The company attributed its GWP growth to higher rates driven by inflation pressures, along with growing home and motor policies in its Australian DIA business.

Impacted by some large events over the half year, IAG’s natural perils costs came in at $524 million. That’s $70 million higher than the allowance.

Excluding the business interruption provision release of $252 million post-tax, underlying NPAT was $216 million, up 25% from the $173 million reported in 1H FY22.

What did management say?

Commenting on the results helping boost the IAG share price today, CEO Nick Hawkins said:

We delivered an improved net profit after tax and reported margin in the first half in challenging economic conditions. We maintained good cost discipline, our businesses are in good shape, and our focus on growth and profitability delivered the strongest first half gross written premium growth in seven years…

Our digital transformation is progressing well… New mobile, automation and online features were introduced across IAG in the first half, delivering simpler and faster experiences for our customers, partners and brokers.

What’s next?

Looking at what could impact the IAG share price in the months ahead, the ASX 200 insurer upgraded its FY23 forecast GWP growth from mid-to-high single-digit growth to around 10%.

IAG is now forecasting a reported insurance margin of around 10% compared to previous FY23 guidance of 14% to 16%. And its full 2023 financial year natural perils allowance was increased to $1.15 billion following the storms and flooding in Auckland.

“Despite the challenges from the high inflation and perils experience impacting our business in the half, I believe we have a sound basis for confidence as we move into the second half,” Hawkins said.

IAG share price snapshot

As you can see in the chart below, the IAG share price is back in the green for the past 12 months, up 2% since this time last year.

The post IAG share price marching higher on 25% profit boost appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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