A nasty downgrade for the already struggling toy, sporting goods and confectionery distributor Funtastic (FUN) which is again forecasting another blob of red ink in its accounts.
The company’s shares fell 13% to just 2.6c, raising potential losses for big shareholders such as Lachlan Murdoch and Gerry Harvey.
But they fell more than 25% at one stage, to 2.2c after the surprise update was issued in a reply to a query from the ASX about a recent price fall.
Funtastic said in that statement to the ASX yesterday that its preliminary assessments indicate revenue in the six months to January 31 would be in the range of $50 million to $54 million, and it expects an earnings loss of between $2.5 million and $4.5 million. The estimates are not definitive, it added.
"This expected loss is due to the deterioration in the company’s second quarter performance which has primarily been driven by softer-than-expected international sales, lower domestic margins and additional one-off rationalisation costs," Funtastic said in a statement.
The company said it had taken steps to ensure a return to profitability in the second half of fiscal 2015.
FUN 1Y – Funtastic warns of H1 loss
It said it had secured a number of new products that, when launched in Australia and in key overseas markets, would increase sales, had decided to expand its Chill Factor range of slushy, ice cream and jelly makers, and continued to benefit from earlier cost-saving initiatives.
Funtastic will report its finalised half year results towards the end of March.
Funtastic provided the earnings guidance in response to a query from the Australian Securities Exchange in relation to movement in its share price last Friday, January 23.
Funtastic said it was aware that an institutional shareholder had been required to reduce its shareholding and had been doing so since mid-December.
Funtastic believed that this was not based on any market sensitive information regarding the company.
There is also legal action over the sale of its Madmen subsidiary to a group of Sydney investors.
That situation was published in the morning business media yesterday, leading to a second statement from the company yesterday.
