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Clover (ASX:CLV) share price falls 10% on FY20 results

Toddler in nursery nosediving over cushion onto floor
Image source: Getty Images

The Clover Corporation Limited (ASX: CLV) share price has plummeted 10.33% in early morning trade following the release of its FY20 results. The Clover share price reached as low as $2.13, before pushing back to $2.17 at the time of writing. 

Let’s take a look at Clover’s results for the financial year.

How did Clover perform in FY2020?

Clover reported a decent FY20 result underpinned by new products delivering growth in new segments and countries.

For the full year ending 31 July, Clover announced a revenue increase of $88.3 million, up 15% over FY 2019.  This was driven by improved demand across all key regions, particularly in Europe.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $18.9 million, an increase of 35% from $14 million in the prior period.

Net profit after tax stood at $12.5 million, an increase of 23.6% compared to $10.1 million the year before.

Earnings per share also increased to 7.51 cents, compared to 6.12 cents.

Clover revealed an operating expense of $11.4 million from investment in research and development programs to deliver future growth. This was a jump from the $10.3 million spent in FY2019.

Inventory leapt to $31.9 million, up from $4.2 million.

Clover advised its balance sheet is strong with $9.2 million cash on hand and a net debt of just $5.4 million.

The infant formula company declared a final dividend of 2.5 cents per share to be paid to shareholders on 18 November.

COVID-19 impact

Clover said that its FY20 result had been positively impacted by COVID-19 with increased demand through Q3 and Q4. This was due to its customers supplying additional infant formula to retail channels depleted by pantry stocking.

The company did advise, however, that new customer development had been curtailed due to the imposed travel restrictions. This affected its ability to perform audits, and attend trade shows.

Demand in the United States from new business development had been constrained as the company focused on other activities. Clover resourced its overseas team to service new and existing customers.

FY 2021 outlook

Due to the uncertainty of COVID-19, the company did not provide a guidance for 1HFY21. However, Clover mentioned that the pantry stocking from consumers could support strong sales in the first half of the year.

In addition, the company will seek to target new customers in Europe to meet the new IF standards and establish online or third-party audits.

Clover will also look to restart new product development in the United States, and increase supply chain vertical integration.

About the Clover share price

The Clover share price has made a strong comeback of 63% since falling as low as $1.33 in March. For the calendar year to date, the Clover share price is down 17.49% and has also fallen 34.44% from its 52-week high.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Clover Limited. 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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