See, there is hope for Qantas (QAN) and Newcrest Mining (NCM) shareholders – dividends don’t die forever, if Pacific Brands (PBG) can lift its game to the point of bringing back shareholder payments, then Newcrest and Qantas can.
And, Pacific Brands now expects full-year earnings to grow 14% or more for the year to June 30 after the forecast rebound in first half earnings happened, enabling the board to reward shareholders for the first time in two years. Net profits from continuing operation jumped 44.4% to $24.3 million in the six months to December 31 – topping market forecasts of about $23 million.
Directors declared an interim dividend of 1.6 cents a share and look like announcing a final in August with management upgrading sales and earnings forecasts for the full year.
They said that sales in the first six weeks of the June-half were up 8% per cent, although management cautioned that second-half results would largely depend on May and June, which are big sales months.
On top of that for the second time in seven years, there wasn’t a mention of restructuring costs or asset write downs in the news release and accounts.
PBG 1Y – Pacific Brands higher on turnaround result
Earnings before interest and tax (EBIT) rose 14.9% to $36.2 million and CEO David Bortolussi sees full-year EBIT rising at least 13.7% per cent to between $73 million and $75 million, well above current market forecasts around $66 million. Topline sales rose 8.6% to $425.3 million in the December half year, thanks to strong comparable store sales from Pacific Brands’ Bonds and Sheridan retail and online stores which offset flat wholesale sales.
Bonds lifted underwear earnings by 12.3% to $30 million, while saw a 5% rise in earnings to $9.2 million. Tontine and Dunlop flooring business (bothy remain on the market) saw a 72% rise in earnings to $5 million.
Mr Bortolussi said one of the biggest challenges facing the company this year and in 2017 was the weaker Australian dollar, which has pushed up its cost of goods. "Price rises and cost saving initiatives have been implemented across the business to mitigate immediate (currency) headwinds, and various other measures are being taken to address further foreign exchange depreciation in 2017," he said.
Pacific Brands suffered a bottom line loss of $108.7 million a year ago after booking $138 million in impairment charges.
The shares have risen 70 per cent over the last 12 months.
Yesterday they continued that trend closing up 10% at 86 cents after being almost 15% higher in earlier trading.
