Pacific Brands (PBG) copped a ‘please explain’ on Monday from the ASX about the shares which had risen in price from around 64c at the start of February, to 72c early Monday.
No, the company said, they didn’t know of any reason why the shares would rally so strongly ahead of the results, which were to be issued on Tuesday.
The results were duly issued yesterday, and after an initial hesitation while investors chewed over them, down went the shares which lost 7 cents, or 9% to 65.5c.
The bullishness of the run up in the first few days of February neatly punctured by another mixed set of figures and comments from a company that is a serial under performer.
Pac Brands unveiled a $219 million first half loss (hardly the stuff to justify the strong recent rally in the share price).
The Bonds underwear maker blamed the loss on $255 million in writedowns across its Workwear and Brand Collective divisions and $11 million in restructuring costs.
The $219 million net loss for the six months to December 31, compares to a first half net profit of $39 million for the first half of 2012-13.
PBG 1Y – Weak profit despite first positive sales growth in five years
A small ray of light was the best sales performance for five years.
Sales rose 2.7% to $656.3 million, the first bit of growth since 2009, helped by a strong performance from its core brand, the Bonds underwear business, (up 20.4%), and a 15% jump in sales of bed linen and other lines at its Sheridan business.
Despite that the company will still pay an interim dividend, though it has been trimmed a touch with the payout ratio falling to 56% from 59% of underlying earnings.
That means dividend fell to 2 cents a share from 2.5c, a rare example of a company reducing its payout to shareholders.
The company said expects its full year earnings to be down around 1%, though it is forecasting a positive sales result. The second half loss is expected to be down on the first half.
The company, which owns popular consumer brands such as Bonds, Berlei, Jockey, Sheridan, Hush Puppies and King Gee, said the group’s operations expected a continuation of challenging and variable market conditions for the rest of 2014.
"We are very pleased with our progress overall, but the full benefits of our investments will take time to materialise in the face of significant headwinds, so as we have said previously, earnings performance will be affected in the short term," Mr Pollaers said.
