G8 Education (GEM) experienced a slight earnings before interest and taxes beat in the first half, according to RBC Capital Markets analyst Wei-Weng Chen. This positive result was largely due to effective management of employment expenses. However, the company is grappling with persistent weakness in occupancy trends. G8 Education is one of Australia’s largest providers of early childhood education and care services, operating numerous centres across the country. They aim to provide high-quality, accessible childcare for Australian families.
As of August 22, spot occupancy stood at 67 per cent, a decline of 5.9 percentage points compared to the previous year. This deceleration is more pronounced than indicated in earlier updates. Revenue figures also fell short of expectations, impacted by the lower occupancy rates and the ongoing pressure on conversion rates due to cost-of-living concerns.
Chen noted that current consensus forecasts projecting flat occupancy for the second half of 2025 now appear overly optimistic. Management anticipates that fiscal year 2025 earnings will remain consistent with fiscal year 2024, projecting flat growth. Capital expenditure is estimated to be between $40 million and $45 million. Furthermore, GEM intends to initiate an on-market buy-back of up to 5 per cent of its issued shares, commencing from mid-September.
