Bingo Industries has cut interim dividend after revealing a 41% slide in statutory net profit after tax (NPAT) to $15.8 million for the six months to the end of December.
The cut was substantial – a third as the payout was lopped to 1.5 cents a share from 22 cents previously.
Covid saw Bingo’s revenue drop 3% to $241.1 million, excluding $22.4 million from the sale of its Banksmeadow, Sydney property.
Underlying earnings fell 20% to $65.2 million after taking into account property sales. More telling was the 20% slide in rubbish collection revenues as Covid and the lockdowns saw clubs, pubs and businesses close and slash their own selling (mean less waste to be collected, sorted and recycled).
The reason for the cut in the dividend was easy to understand – a still gloomy outlook for margins amid the wash up of the pandemic.
Directors said that while the short-term outlook was now looking “better than previously anticipated”, they still expect its earnings margin to decline by between 200 and 300 basis points in the June 30 financial year before re-bounding to 30% in coming years.
The company’s underlying gross margin fell to 27% in the latest half from 30% a year ago, thanks to the impact of Covid on revenue and costs.
Because waste pricing is stabilising is now starting since the start of 2021, the decline will be more like 200 basis points, which is still a big hit.
“Financial year 2021-22 and beyond has the potential to offer significant upside and is expected to provide the foundation for sustained future growth underpinned by regulatory and market tailwinds increasing the addressable market size and the ability to better utilise our network capacity,” the company told the market.
“Market conditions have held up better than first anticipated and greater certainty around outlook together with the pipeline of opportunities supports a broader recovery going into 2021-22,” the company told the market this morning.
The statutory result includes $700,000 in ‘corporate defence expenses’ related to a $2.6 billion unsolicited takeover offer from private equity firm CPE Capital last month, and $600,000 of legal expenses related to the ACCC’s investigation into the building and demolition waste sector.
Bingo also warned of higher legal costs in the second half.
Bingo said COVID-19-related labour costs and Victoria’s lock down saw operating costs increase by $700,000.