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GALE Pacific share price drops on dismal earnings guidance

GALE Pacific Limited (ASX:GAP) disappointed investors this morning with pre-tax profit guidance in the range of $1.25 – $1.35 million for the second half of the 2018 calendar year. The GALE Pacific share price has fallen 7.4% to $0.32 at the time of writing.

It’s no surprise that the market reacted negatively to the news, with the upper bound of this guidance range representing a 22% decline from the previous corresponding period. In its announcement, GALE Pacific primarily attributed the result to lower-than-expected sales from Australian operations during November and December. Cooler weather conditions, it said, were partially to blame.

Despite the dismal result, GALE Pacific remains positive on its FY19 outlook, anticipating continued strong growth in the Americas region driven by key retail partners such as Home Depot and Lowes. The company still believes it will be able to deliver earnings per share growth for FY19, a goal which will be made easier by an on-market share buyback program.

GALE Pacific is a global marketer and manufacturer of screening and shading products. It has vision to become a fabrics technology business while expanding further outside of Australia, particularly into the US. It has a market capitalisation of approximately $90 million.

The company plans to release its financial report for the second half of calendar 2018 on or around 15th February.

Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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