The Advance NanoTek Ltd (ASX: ANO) share price is crashing lower on Monday afternoon after the release of a sales update.
At the time of writing the advanced materials company’s shares are down 11% to $3.35.
This leaves the Advance NanoTek share price trading 52% lower than its 52-week high and within sight of its 52-week low of $3.20.
What was in Advance NanoTek’s update?
Today’s update revealed that the company’s poor performance has continued in FY 2021 due to negative impacts from the pandemic.
According to the release, based on current distributor forecasts for the second quarter, the company expects its first half sales to be lower than the prior corresponding period.
Management explained that travel restrictions are reducing demand for sunscreen, which is having a knock-on effect on sales of its zinc oxide product. In addition to this, it believes its shortened delivery times are having a negative impact on near term demand.
The company explained: “ANO understands the delay in sales orders is due to the significant travel restrictions caused by the second and third waves of COVID-19 in Europe and the US.”
“We are also seeing distributors destocking due to us offering much shorter delivery times. Distributors prepared to comment, have indicated that Q3 sales should improve as customers are gearing up for the next season and continue to improve over foreseeable future,” it added.
In light of this sales uncertainty, the company advised that it can longer say that its first half result will be stronger year on year. Nor can it accurately predict its full year results because of the uncertainty.
Though, it has advised that the Board is working on a number of initiatives in an effort to diversify its product offerings. It is also looking to increase its distribution network and prepare the company for a potential significant increase in demand for zinc oxide over the next three years.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek 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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