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Here’s why Hills Ltd plummeted 32% on Tuesday

Shares of technology and outdoor equipment specialist Hills Ltd (ASX: HIL) were absolutely smashed on Tuesday after the company reported a sharp decline in earnings whilst also predicting tough times ahead.

The shares were trading at a high of $2.10 12 months ago, but have since fallen 57%. They finished Monday’s session trading 32.33% lower at just 90 cents per unit.


Source: Yahoo Finance

What Happened: For the half-year ended 31 December 2014, Hills recorded net profit of $9 million which represents a 36.2% decline on the $14.1 million reported in the prior corresponding period. Meanwhile, the company predicts its full-year net profit will come in between $18.5 million and $19.5 million. Assuming the profit comes in at the upper end of that range, it would still be a 21% decline compared to last year’s profit.

Hills’ management said: “The further downward pressure on the Australian dollar and the Reserve Bank’s forecast for a longer period of below trend growth imply a conservative outlook for the Australian economy and in turn our core business.”

Considering the headwinds facing the business, it seems investors would be best to avoid Hills Ltd for now.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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