ASX 200 falls 0.9%, Nick Scali reports, Vulcan jumps

The S&P/ASX 200 Index (ASX:XJO) fell 0.9% today. Nick Scali Limited (ASX:NCK) reported its HY21 result. Vulcan (ASX:VUL) shares jumped 15%.

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The S&P/ASX 200 Index (ASX: XJO) fell 0.9% today to 6,766 points.

Here are some of the highlights from today:

Nick Scali Limited (ASX: NCK)

The furniture business just reported its FY21 half-year result. The Nick Scali share price went down 2% in response.

The company said that its sales revenue went up 24.4% to $171.1 million. The gross profit margin increased by 180 basis points to 64%.

Nick Scali’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 94.2% to $60.2 million and underlying earnings before interest and tax (EBIT) went up by 100.3% to $57.7 million. The underlying EBIT margin increased by 1,270 basis points to 33.6%.

The retailer reported that its operating cash flow before interest and tax rose by 222.3% to $53.5 million and underlying net profit after tax (NPAT) grew by 99.5% to $40.5 million.

The company said that sales order growth for January 2021 was 47%, representing the largest month of written sales orders in the company’s history. January is traditionally the company’s largest trading month and the sales order book at the end of January was at an all time high, which was a further increase on December 2020.

For the half-year result, the Nick Scali board decided to increase the interim dividend from 25 cents per share to 40 cents per share. 

AGL Energy Ltd (ASX: AGL)

AGL announced today that it intends to recognise post-tax charges of $2.69 billion in its result for the period ending 31 December 2020.

These charges can be broken into different parts. There’s a $1.92 billion in provisions for onerous contracts related primarily to legacy wind farm offtake agreements. Next, there’s increases to environmental restoration provisions of $1.11 billion and further impairments of $532 million across AGL’s generation fleet and natural gas assets, net of a positive tax effect of $878 million.

The ASX 200 share said these charges follow an accelerated deterioration to long-term wholesale energy market forecasts in recent months, reflecting policy measures to underwrite new build of electricity generation and lower technology costs, leading to expectations of increased supply. As a result, the long-term outlook for wholesale electricity and renewable energy certificates now indicates a sustained and material reduction in prices.

There has also been a sharp reduction in near-term wholesale energy prices because of challenging macro-economic conditions. This has reduced the valuation of its generation fleet cash generating unit after a review. The impairment of the natural gas assets is a direct result of the increase in environmental restoration provisions.

AGL managing director and CEO Brett Redman said: “As Australia’s largest energy retailer and largest generator of electricity, we continue to see material opportunities for AGL to participate in the energy transition as customer needs, community expectations and technology evolve.”

The AGL share price dropped 3.5% in response.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price went up 15.7% after announcing the successful completion of its $120 million institutional placement to accelerate development of its project.

It said that it has received firm commitments to raise $120 million (before costs) for a placement at $6.50 per share, which was a 17.1% discount to the last closing price of $7.84.

Two of the investors that are involved are Hancock Prospecting (led by Gina Rinehart) and European ESG-focused institution BNP Energy Transition Fund.

The funds will be used for three areas. The first area is project development, feasibility study costs and permitting. Next is the drill site acquisition and preparation. Third and finally, the money will be used for strategic opportunities to accelerate project development.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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