The InvoCare Limited (ASX: IVC) share price is trading lower following the release of its full year results.
At the time of writing, the funerals company's shares are down slightly to $11.17.
How did InvoCare perform in FY 2020?
It was a very difficult 12 months for InvoCare because of COVID-19 and this was reflected in its financial results.
For the 12 months ended 31 December, the company reported a 4.7% decline in operating revenue to $476.2 million. Management believes this reflects the resilience of its core business and the benefits of diversification in challenging trading conditions.
Unfortunately, the company's earnings didn't hold up as well. InvoCare reported a 29% decline in operating earnings before interest, tax, depreciation and amortisation (EBITDA) to $102.6 million.
The company explained that employee costs (with no JobKeeper support), the fixed cost nature of its facilities, and the previously announced $7 million impact of significant operating items weighed on its operating profit result.
On the bottom line, the company reported a loss after tax of $9.2 million. This partly reflects the impact of non-cash movements in the Prepaid Funeral business' funds under management (FUM).
Despite this loss, the company declared a fully franked final dividend of 7 cents per share. This brought its full year dividend to 12.5 cents per share, which is down 70% from 41 cents per share in FY 2019.
Management commentary
InvoCare's new CEO, Mr Olivier Chretien, said: "While the Group's financial results have been put under pressure in 2020, it is pleasing to see how resilient the business and our people have been."
"I want to thank our dedicated employees who have continued to provide exemplary service despite multiple disruptions. They have provided safe environments and leveraged technology to ensure our client families were able to continue to celebrate and farewell their loved ones in whatever form that took."
Outlook
InvoCare advised that it remains cautious in its outlook. It notes that short term market conditions are still being impacted by COVID restrictions and the timing and extent of the unwind of related impacts remains hard to predict.
Nevertheless, it feels confident about the long-term potential of the business,. It expects its future growth to be supported by population and ageing trends in its markets. Management has also initiated an operating model and cost efficiency review to further strengthen the business' foundations.
Mr Chretien commented: "I am energised by the potential of our businesses. We have an experienced team, strong national and local brands, a modernised asset base and leading market positions. I see many opportunities to leverage and optimise our foundations to meet the evolving needs of our client families and communities with an expanding, omni-channel, value proposition."
"We can also extend our industry leadership through increased focus on talent, safety, sustainability, digital, innovation and proactive stakeholder management. I look forward to setting out our strategic plan for the next 5 years at our inaugural Investor Day to be held in May," he concluded.
Following today's decline, the InvoCare share price is down 23% over the last 12 months.
