Meanwhile, across in the ASX Industrials sector, things were also busy. Here’s some news released by Costa Group, Fisher & Paykel Healthcare and ALS Ltd.
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Shares in fruit and vegetable growth and supplier Costa Group (ASX: CGC) were up more than 8% yesterday after shareholders received a cautiously optimistic outlook for the 2022 financial year.
CEO Sean Hallahan had no ‘bomb’ in the annual meeting update – everything seems to be going well, crops growing, no troubles (as there have been in past years) with mushrooms or blueberries, even though citrus is an off year and volumes will be lower than in 2021.
The fruit and vegetable grower and marketer expects its earnings to be $5 million higher this year while its after tax profit is predicted to fall $6.4 million
But the company is expecting stronger pricing to partially offset higher fertiliser, packaging, and shipping costs.
Grape volumes improved significantly versus2021, including the return of volumes from the Colignan crop. “Pricing has been strong throughout the season for our premium varieties,” the meeting was told.
2022 is a citrus ‘off year’, and the season has commenced in Central Queensland. Integration of the 2PH business has proceeded to plan, early season demand has been positive and early yields, quality and pricing have been strong.
“To date only circa 1% of our total citrus crop has been harvested. Consistent with prior years, the majority of the citrus crop is harvested in the second half of the calendar year,” Mr Hallahan said.
He forecast 2022 operating and growth CAPEX to be in line with previous guidance. Previous guidance for depreciation and amortisation expenses of circa $130 million and interest costs of circa $38 million remains consistent with current expectations.
“Increases over prior year reflect the impact of the acquisitions made in the second half of CY21 and the renegotiation of Vitalharvest/MAM leases that took effect in late CY21. As previously advised, relative to the old leases, the group’s CY22 annualised EBITDA-S will be approximately $5m higher, whilst the NPAT-S result is forecast to be $6.4m lower, notwithstanding that there will be no material impact on cash earnings,” Mr Hallahan told the meeting.
With respect to supply chain costs and inflation, he said that consistent with 2021 it is expected that transport, fertiliser, packaging and export shipping costs will continue to be elevated across CY22.
At this point, domestic pricing is strong, and the company is working to mitigate the impact of the higher costs through increased domestic and export pricing, the CEO added.
The shares ended the session on $3.16.
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Investors in NZ-based Fisher & Paykel Healthcare (ASX: FPH) weren’t too bothered by the 28% slide in annual profits and lack of an outlook for the 2022-23 financial year.
The ASX listed shares initially edged up to a day’s $A18.92 yesterday in the wake of the annual results which saw higher dividends despite the downturn.
But they then lost support in later trading to end Wednesday off 2.3% at $18.29.
The company had conditioned investors to expect lower revenues and earnings in updates as it saw demand for its breathing assistance products slow from the unprecedented high levels during the earlier stages of the Covid-19 pandemic.
Profit fell to $NZ376.9 million in the year to March 31, from $NZ524.2 million a year earlier. That was on a 15% drop in annual revenue to $NZ1.68 billion, in line with the company’s forecast for a fall in annual revenue to between $NZ1.675 to $NZ1.7 billion.
Despite that weakness, final dividend was boosted 2% to 22.5 NZ cents a share. That took the total for the March year to 39.5 NZ cents a share, up 4%.
FPH saw buoyant 2020 and 2021 financial years thanks to the surge in demand for its breathing equipment in the pandemic as hospitals turned to nasal high flow therapy as a front-line treatment for Covid-19 patients. Over the last two financial years it says it has supplied $NZ880 million of hospital hardware which was equal to around 10 years normal sales.
But with community vaccination campaigns boosting protection levels and a fall in the number of people suffering the more serious complications of Covid, demand for its breathing aids is slowing and, with it, revenue from its key hospital division which fell 19% to $NZ1.2 billion in the year to March,
CEO Lewis Gradon said in Wednesday’s release that “Following an unprecedented 2021 financial year, the company’s performance was once again strong, with operating revenue 33% above the pre-COVID-19 2020 financial year.”
“During the 2022 financial year, we invested $154 million into research and development and we brought a number of exciting new products to the market.
To acknowledge the people of Fisher & Paykel Healthcare, directors also approved a profit-sharing payment totalling $NZ19 million for the 2022 financial year to be paid to employees who have worked for the company for a qualifying period.
Looking to the current new financial year Mr Gradon was reticent about providing guidance, saying in the statement.
“Given the ongoing uncertainties regarding our customers’ stockholding choices and their capacity to implement new protocols with personnel shortages and the possibility of further surges of COVID- 19 over the near term, we are not currently providing quantitative revenue or earnings guidance for the 2023 financial year.
“For gross margin, freight costs are likely to remain elevated, and air-freight a higher proportion of freight than pre-COVID-19.
“We are continuing to advance our manufacturing capacity and facilities projects, and we also expect to hold higher levels of inventory to help address global supply chain challenges.
“If freight rates remain at current levels, then we would expect constant currency gross margin in the 2023 financial year to be in line with the 2022 financial year,” he said in the statement on Wednesday.
Those higher freight costs saw FPH’s gross profit margin dip to 62.6% from 63.2%, so that’s the guide for the only guidance provided.
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And finally, Brisbane-based testing group ALS Ltd (ASX: ALQ) is looking at another solid year ahead after reporting higher revenue, earnings and declaring a higher dividend for the 12 months to the end of March.
The company told the ASX on Wednesday that it had made “a positive start to the 2023 financial year with strong volumes across the Life Sciences and Commodities divisions.”
Life Sciences volumes continue to be strong across Environmental, Food and Pharmaceutical in all geographies. Price increases and procurement practices have allowed the division to manage inflationary pressure to date but the environment remains volatile.
“The Commodities division, particularly Geochemistry and Metallurgy, are continuing to benefit from strong demand for commodities and energy metals.
“Strong volume, price increases and increased capacity in Geochemistry are driving further volume growth and margin accretion in the first months of FY23. Metallurgy activity continues to be strong with Coal and Inspection trading in-line with FY22 levels.
“The trading environment for the Industrial division is gradually improving following the opening of the state borders in Australia, the gradual implementation of price increases, and the initial benefits from procurement initiatives.”
One area where it is expecting to see a surge in new business is in battery minerals – lithium, iron, copper, nickel, cobalt and the PGE minerals. They have such high levels of purity specified that testing is going to be an important assurance in developing the loop.
ALS said revenue jumped 24% to $2.182 billion for the year due to strong performance from Life Sciences (which saw a 24.2%jump) and Commodities (a 31.1% gain)
Statutory net profit after tax was $190.5 million, up $20.9 million “following the continued strong performance in the second half, partially offset by non-operational one-off costs.”
Underlying net after tax profit was $264.2 million, up 42.1%, at the top-end of the guidance (upgraded in March 2022) of $260 million to $265 million.
Final dividend of 17.0 cents a share (partially franked to 30%) took the total for the year to 32.8 cents a share, up 42% or 9.7 cents a share from 2020-21.
FY22 total dividend of 32.8 cps, an increase of 9.7 cps (42%) compared to FY21 representing a payout ratio of 60% of FY22 underlying NPAT
ALS chairman Bruce Phillips said in the ASX statement on Wednesday, “This is another very strong performance by our increasingly global enterprise.”
“Underlying NPAT was up 42% yoy and achieved the top end of our previously upgraded market guidance. The Company has emerged stronger from the pandemic years which has underpinned the board’s confidence to declare a 42% increase yoy in dividends for our shareholders.
“The board and management have been developing a refreshed strategy which we look forward to sharing with shareholders at the FY22 AGM in August.”
And CEO, Raj Naran said in the same statement “The Group has delivered strong organic growth, margin accretion and made highly strategic acquisitions during the year.
“The outperformance was driven by the Life Sciences volumes surpassing pre-COVID-19 pandemic levels, and the on-going strength of the commodity volumes and price in the Commodities division. The acquisition of a 49% stake in Nuvisan is providing a solid initial financial and strategic contribution to the pharmaceutical business.
“FY22 marks the successful conclusion of our five-year strategy. Over this period, the Group successfully exceeded all strategic priorities, achieving Group Revenue and Underlying EBIT growth, improving cash conversion, and delivering solid returns on invested capital.
“Trading conditions have remained supportive to date and our balance sheet is well positioned to invest in future growth opportunities.”
The shares rose nearly 2% to $12.01.
