Diversified industrial group, Alesco Corporation continues to find the going tough.
After big losses and write-downs in the year to May, which came after a slump in to the red in the year to May, 2009, shareholders were told at the AGM in Sydney yesterday that the 2011 financial year had opened fitfully.
Alesco reported a net loss of $124.3 million for the year ending May 31, 2010, due to impairments and one-off expenses.
The result followed a loss of $12.8 million a year earlier.
The company said first quarter sales were down on a year ago and the second quarter was tough.
But first quarter earnings were up on a year ago but the company’s board and management refused to give any forecasts.
"Across the group, revenue was down approximately two per cent on last year for the first quarter," Mr Luby told shareholders at the company’s annual general meeting in Sydney.
"Although earnings are ahead of prior year, our overall results are below expectations, despite a good performance from the Garage Doors and Openers division.
"Our second quarter is traditionally the strongest earnings period for Alesco.
"However, three weeks into the quarter, we are yet to see any evidence of the usual seasonal uplift in our core markets."
Consequently, said Mr Luby, Alesco’s new chief executive Peter Boyd was looking to accelerate Alesco’s cost-reduction program.
Mr Luby said Alesco’s management was strongly focused on delivering the "Project Restore" operational improvement program.
"However, we will need to see stable market conditions for our products and services before we can be confident about 2011 financial year trading results," Mr Luby told shareholders.
The news saw the company’s shares lose the small gain they had built earlier in the day when they peaked at $2.90 (which was up 7c on Tuesday).
Alesco shares fell 7c, or 2.4%, to $2.76 after the news from the AGM filtered back into the market.
Mr Lubby’s address was long and contained numerous apologies and explanations for the company’s poor performance. For a chairman facing his first meeting, it was a tough initiation.
He said the board was working hard to rebuild investors’ confidence in the company after disappointing financial results.
"We acknowledge the personal impact on shareholders and employees of the company’s performance, including the substantial fall in share price and the reduction in dividend payout," he said.
"The board and management recognise that we have considerable work to do to restore investors’ confidence in the company and its prospects for the future."
Mr Luby said the Alesco board recognised shareholder frustration as a result of reduced overall dividend payouts over the past two years, and the board was working hard to restore dividends in the 2011 financial year.
"Each of our divisions is cash-generative and, subject to the group’s performance and financial position, as well as the outlook at the time, the board expects to resume paying dividends with the interim dividend in March 2011," he said.
"I know that for many Alesco shareholders, particularly those who have been with the Company for a long time, dividends are important in addition to share price appreciation.
"The Board recognises shareholder frustration as a result of the reduced overall dividend payouts over the past two years and we are working hard to restore dividends in FY11.
"Today we are asking shareholders to approve a change to the Company’s Constitution to bring it up to date with recently introduced legislation relating to new dividend payment laws to enable dividends to be paid out of capital.
"Despite recent changes to the law relating to the payment of dividends out of capital, the Board confirms its decision that no final dividend for FY10 will be paid."
