This is getting to be a regular event for shareholders in Melbourne based packager, Pact Group – bad news sees a fall in the share price… its been happening now, off and on for the past couple of years.
Just over a week ago Pact revealed impairments ahead of the release of the full December half-year results and the shares fell sharply, losing more than 18% of their value in two days.
Suspension of the 11.5 cents a share dividend didn’t help either.
Yesterday’s release of the interim results saw the shares lose more than 17% to end at $2.58.
That’s a combined fall of more than 32% across a week for the same bit of news, and a bit of extra detail on the underlying earnings outlook. Investors appear to have gone right off this stock.
Pact reported a statutory loss of $320 million, as expected, so the sell-off was a bit hard to understand. The statutory profit for the year-earlier period was $44 million.
Sales revenue rose 13% to $915 million for the six months ending December 2018, and underlying earnings fell to $36 million, down from $51 million before the asset write down.
Chief executive Raphael Geminder called it “a very challenging start to the year”. Pact expects full-year earnings before interest, tax, depreciation, and amortisation before one-off items to be in the range of $230 million to $245 million. In 2017-18 EBITDA was $234 million.
Assuming no more one-off items, Pact will report a statutory loss for the year of possibly $100 million or thereabouts given the size of the impairment of $340 million (net).
“The range is impacted by uncertainty around the speed with which revenue and efficiency projects can be delivered and the rate with which input cost lags can be recovered,” the company told the market this morning.
“The board will continue to balance the capital needs of the business with shareholder returns in order to make a final assessment regarding reinstating dividends at the appropriate time,” the company said yesterday.
