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PWR share price slides despite steady FY20 report

racing car skidding representing sliding PWR share price
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Shares in PWR Holdings Ltd (ASX: PWH) have lost 3.23% in early trade, despite the company  reporting relatively steady results for FY20. At the time of writing, the PWR share price had fallen to $4.50 after closing yesterday’s session at $4.65.

How did PWR perform in FY20?

Earlier today, PWR released its financial report for the year ended 30 June 2020.  

The report was headlined by an 8.1% increase in net profit after tax of $13.1 million for FY20. Additional highlights included a 7.4% lift in earnings before interest, taxes, depreciation and amortisation (EBITDA) of $23.37 million and 9.3% surge in operating cash flow of $20.32 million. PWR reported relatively flat revenue of $65.73 million for FY20.

PWR labelled its performance in FY20 as relatively steady given the economic repercussions of the COVID-19 pandemic. The company’s performance was fuelled by a strong first half, with operations in the second half thrown into turmoil as a result of the pandemic.

In response to the COVID-19 pandemic, PWR reduced staff working days. As a result, the company utilised the JobKeeper program in Australia and Pay Check Protection in the United States. PWR noted that these programs provided $1.74 million and $1.77 million in wage and overhead relief respectively.

According to PWR, the stable result reflects the company’s diversified revenue streams with growth of over 100% in emerging technologies and OEM customers. The company also noted that favourable currency exchange rates resulted in revenue for FY20 being slightly higher than FY19 despite the pandemic.

In addition, PWR’s management assured shareholders that the company has a strong balance sheet boasting more than $20 million cash on hand. As a result, PWR declared a final, fully franked dividend for FY20 of 4 cents per share, a 42% increase from last year.  

What is the outlook for PWR?

PWR designs and manufactures high performance cooling systems for the automotive and aerospace industries. This includes the production of aluminium radiators, intercoolers and oil coolers for elite motorsport teams that participate in Formula One, NASCAR, V8 Supercars, DTM and IndyCar.

Despite the interruption, PWR maintains that the company is still on track for its business and investment growth plan. With the resumption of motorsport around the world the company is optimistic on its outlook.

PWR acknowledged continued investment in revenue diversification and highlighted the benefits of dual manufacturing sites in the US and Australia.

About the PWR share price

Despite the relatively steady result, the PWR share price dipped nearly 6% to $4.38 before recovering somewhat. At the time of writing, the PWR share price is trading at $4.50, more than 3% lower for the day. The PWR share price has rallied 73% from its March low but remains 4.46% lower for 2020.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended PWR HLDING FPO. 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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