The Eclipx Group Ltd (ASX: ECX) share price continued to crash lower on the ASX yesterday as it fell a further 12.75% with no signs of a turnaround for the Aussie leasing and fleet management group.
The Eclipx share price is down 73% so far this year including 25% in the last week alone after a recent trading update and the scrapping of a planned merger with McMillan Shakespeare Ltd (ASX: MMS).
What did Eclipx announce that was so bad?
Management announced that the company's financial performance had "softened" since its 29 January 2019 update as Grays Industrial and Insolvency segments continue to underperform. The group is looking at divesting its non-core assets, including its Grays and Right2Drive segments, to combat declining profitability and focus on its core Fleet & Commercial equipment business, as well as novated leasing.
The vehicle fleet leasing company reported net profit after tax and amortisation (NPATA) had fallen 42.4% compared to the first 5 months of FY18 and that it could not provide full-year guidance for FY19 at the moment. The company's dividend is also in danger with management yet to decide on the best course of action.
What's happening with the merger?
Following the trading update, McMillan Shakespeare indicated that it believes it is impossible to complete the remaining steps necessary for the Scheme of Arrangement between the two entities to become effective by 30 April 2019.
Both Eclipx management and McMillan Shakespeare announced that the merger is now "unlikely" and this has triggered the downwards momentum we've seen in the Eclipx share price in recent days.
While big question marks remain regarding the Eclipx share price and the company's long-term future, this buy-rated stock could be set to take a new-age $22 billion by storm in 2019.
