Bad news Friday, at least for three ASX-listed companies.
Metcash, the grocery, grog and hardware supplier says the 7-Eleven convenience chain will no longer be a customer from the middle of next year – news that sent the shares down more than 10% at one stage.
They bottomed out at $2.67 before recovering slightly to end at $2.83, down 6.9%.
Metcash said in a statement to the ASX that the current deal to supply 7-Eleven will end from August 2020 after it was unable to reach an agreement with the convenience group.
This contract is worth about $800 million, mostly from low-margin tobacco sales.
The sticking points appear to be east coast delivery routes and scheduling.
“Metcash determined these requirements would lead to supply being uneconomic for its Convenience business,’’ the company said in a statement.
It says it is still in discussions for Western Australia and some smaller categories in east coast markets.
“Metcash will be assessing opportunities to help offset the future earnings impact of today’s advice from 7-Eleven.”
Metcash releases its 2019-20 half-year figures on December 5.
Meanwhile, shares in New Zealand-based utility software provider Gentrack fell more than 14% at one stage yesterday after issuing a small earnings downgrade – the second in two months.
The company said in a statement to both the NZX and ASX that its full-year earnings before interest, tax, depreciation, and amortisation (EBITDA) will be “marginally below the previously advised guidance range of between $NZ25 million ($23.6 million) and $NZ26 million ($24.5 million).
This is the second downgrade since September from an earlier EBTIDA forecast of between $NZ27 million ($25.5 million) and $NZ28 million ($26.4 million) due to bad and doubtful debts in the UK utilities market.
It also warned that ”in light on continuing uncertainty in the UK market, the company expects that its outlook for 2019-20 is broadly flat”.
Results for the full year ending September 30 are due out next week.
Gentrack provides software for essential services to utilities and airports. It employs over 550 people in offices across New Zealand, Australia, the UK, Singapore, USA, and Europe and services over 200 utility and airport sites globally.
The shares ended down 12.4% at $4.21.
And shares in Mayne Pharma ended down 11% at $4.85 after another profit warning, this time delivered to the AGM on Friday.
CEO Scott Richards revealed the downgrade in addresses to shareholders.
In the four months to the end of October, they said the company’s gross profit was down 33% compared to the same period in 2018, on a 16% slide in revenue.
“Group revenue to the end of October was $154m, down 16% on the prior corresponding period (PCP),” Mr. Richards said.
“Whilst disappointing, this was consistent with revenue in the first four months of this calendar year (Jan-Apr 2019). These results reflect additional competition on our key generic products – liothyronine and dofetilide – that we have previously reported to the market.
Our group gross margin has been impacted by our changing product sales mix and inventory obsolescence in generics.
“We are tightly managing our operating and R&D expenses across the organisation as we foreshadowed at our full-year results in August and have achieved a $4m or 7% cost reduction in the first four months of this fiscal year versus last year,” he said.
He did not give full-year earnings guidance but said the longer-term outlook ”has improved significantly over the last year following the approval and launch of [fungal treatment] TOLSURA” and the potential launch of a new contraceptive with Mithra.