Shares in salary packaging company McMillan Shakespeare (MMS) recovered some of this week’s 6.1% sell-off yesterday after the company spoke to the investment community for the first time in six weeks.
The company held a web briefing on its 2012-13 results which were issued at the end of August, but left the market none the wiser about the impact of the move by the former Rudd government to tighten fringe benefits tax rules on cars.
In fact MMS executives declined to give any guidance at all yesterday for the rest of the current financial year, even though the Abbott government promised to remove the changes if elected. It’s now in Canberra, but investors remain cautious (as does the company, it seems).
MMS shares opened lower, falling nearly 2%, but then rebounding as investors assessed the comments from the company.
MMS shares rose 53c or 3.9% yesterday to $12.82, which is just above their closing on Monday at the end of a 5% plus sell that day.
MMS shares plunged 50% in July after that Rudd government proposal to abolish tax breaks for employer-provided cars.
MMS YTD – Will the good times return to McMillan – no one’s saying, including the company
McMillan chief executive Michael Kay told yesterday’s briefing that investors will have to wait until the company’s annual general meeting in October to be given a profit guidance.
He said it was still too early to say when business would return to normal.
"We think Labor’s announcement on the proposed taxes and air bubble created in our system is likely to have a material adverse effect on our remuneration services segment in FY14," he said.
"But due to a raft of uncertainties, we really have no present view about what that is going to be.
"There are a lot of pluses and minuses, and we really don’t have a clue. But we’ll have a better idea come the AGM," he said. The AGM will be held in Melbourne on October 22.
By then the company should have a better idea of the coalition’s plans on the future of the tightening proposal. They have said they won’t implement it, but the budget needs new tax revenues.
McMillan reported a net profit of $62.1 million for the year to June, up 14.5% from a year earlier.
From the guarded comments yesterday, the company believes it will struggle to match that profit in 2013-14.
And it cautioned investors to be wary about regulatory risk; "Regulatory risk is a permanent one," Mr Kay said. "Some people will take view that regulation risk has increased, some will take the view that it has significantly decreased. I’ll leave it up to market participants to form their view."
