Asaleo Care Ltd share price climbs higher on return to profit growth

The Asaleo Care Ltd (ASX:AHY) share price is up 2% in early trade after its half-year results revealed a return to profit growth. Is it time to invest?

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In early trade the Asaleo Care Ltd (ASX: AHY) share price has climbed 2% higher to $1.49 following the release of the personal care and hygiene company's half-year results.

Here are key highlights from its first-half release:

  • Revenue increased 0.5% on the prior corresponding period to $294.2 million.
  • EBITDA climbed 4% to $60.9 million.
  • Net profit after tax increased 4.1% to $28.2 million.
  • Statutory net profit after tax was up 11% to $27.7 million.
  • Earnings per share of 5.2 cents.
  • Interim dividend of 4 cents per share, 50% franked.
  • Outlook: Full-year guidance of low single digit growth remains unchanged.

Overall I felt this was a decent result from Asaleo Care and was pleased to see the company return to profit growth again.

Furthermore, it was good to see the company reiterate its full-year guidance of low single digit profit growth despite the challenges of higher electricity and pulp pricing and a competitive retail marketplace.

The biggest driver of the result was its Tissue segment. Although segment revenue rose just 0.7%, lower pulp pricing, significant logistics savings, and improved sales mix led to segment EBITDA increasing 18.3% to $32.7 million.

This helped offset the disappointing performance of the company's Personal Care segment. While segment revenue increased 0.2%, EBITDA slumped 8.8% to $28.2 million due largely to an increased spend on advertising and promotional activities.

Should you invest?

Based on today's result Asaleo Care's shares are changing hands at 12x earnings and provide a trailing partially franked 6.7% dividend.

Whilst this is cheap and could make Asaleo Care worth a look, I wouldn't be in a rush to make an investment just yet. I'd rather hold out and see how the business performs in the second-half before making an investment.

In the meantime investors might want to take a look at the sellers of its products such as Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES) instead.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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