A rare bit of good news for investors about one stock at least – The Perth based shipbuilder and defence contractor, Austal says it has been told by the US Navy it is performing “mission essential functions” and been urged to keep making ships.
Investors loved that news and sent the shares up more than 10% to $2.55.
Austal has operations in Perth, the US, and other countries. It currently has six ships under construction for the US Navy at its shipyard in Alabama.
Austal said its US operations currently generate 77% of its total revenue and 89% of its earnings before interest and tax (EBIT).
Austal said it was working with the US Government to protect its workforce and to continue its shipbuilding operations.
Assistant Secretary of the United States Navy (Research, Development, and Acquisition), James F. Geurts wrote a letter to the head of Austal’s US operations Craig Perciavalle about Austal’s operations.
“Given the mission essential functions you perform, while ensuring the safety and wellbeing of the workforce, I cannot stress enough the importance of accomplishing this (shipbuilding) mission,” Assistant Secretary Geurts wrote in the letter dated March 19, according to a statement from Austal yesterday.
Austal Chief Executive Officer, Mr. David Singleton said the USA shipyard is adhering to the strict safety guidelines issued by the United States Centers for Disease Control and Prevention and the World Health Organization and has taken a number of significant steps to ensure workforce safety at the shipyard.
Waste group, Cleanaway has also suspended its 2020 earnings guidance but has confirmed its interim dividend of 2 cents a share, in contrast to the action from WPP.
Cleanaway said it had seen no decline in volumes and that management believed waste removal was an essential service.
Directors said the rising uncertainty caused by the march of COVID-19 was behind the decision to suspend guidance, even though there has been no drop off in volumes or business levels.
The shares jumped 5.6% percent to $1.505.
Mining services group, Cardno has withdrawn guidance for the 2019-20 full year as some of its employees self-isolate around the world.
In a statement to the ASX yesterday, the company said it was “withdrawing its earnings guidance for FY2020 due to the level of uncertainty resulting from the COVID-19 pandemic.
“After 8.5 months, Cardno’s trading results are consistent with the earnings guidance previously provided, however as client sites, client staff and our own staff self-isolate or are quarantined around the world, there is potential for Cardno’s project delivery schedule to be impacted in the short to medium term,”
The news must have been expected by investors – shares lost 4.1% to 23 cents yesterday. That took the loss so far in 2020 to more than 51%.
In the ASX statement, Cardno’s CEO Susan Reisbord said “Cardno is working with our clients to ensure that we can continue to deliver projects and solutions with as little disruption as possible.
“A number of Cardno’s businesses are uniquely positioned to assist our clients as communities and societies eventually exit the COVID-19 challenges. As a company, we shall shortly pivot our focus toward identifying and prioritising our efforts to best assist our clients as they exit the pandemic and focus on the future.”
“Cardno’s ongoing conservative balance sheet management affords the company appropriate cash and undrawn debt reserves and the company has positive working capital (debtors and WIP exceeding creditors). Cardno’s debt facility matures in October 2022,” she said.
Shares in bathroom and kitchen parts supplier GWA Group edged up 0.8% yesterday to $2.55 despite the company withdrawing its full-year guidance.
GWA told the ASX it had made the decision even though it believes it could meet its forecasts as the second half of 2019-20 was trading in line with expectations and higher than the first half.
“However, because of the uncertainty that lies ahead the board of directors have decided that the guidance should be withdrawn,’’ CEO Tim Salt said in a statement.
GWA, which sells brands like Caroma, Dorf, and Clark, has activated its business continuity plan and has good supplies and inventory, Mr. Salt added.
“GWA is in a strong financial position with a single three-year multi-currency revolving facility of $210 million which matures in October 2022, we also have a $40 million revolving bilateral facility which matures in October 2020m,’’ he said yesterday.
The company said that around 75% of its imports are hedged at a value of the Aussie buying 68 US cents, which is about 10 cents above its current position.
