Shriro (ASX:SHM) share price tumbles 7% despite profit surge

The Shriro (ASX: SHM) share price tumbled lower today despite the company posting a 180% growth in profits for FY2020. We take a closer look.

| More on:
falling asx share price represented by woman falling through mid air

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shriro Holdings Ltd (ASX: SHM) shares were tumbling today after the consumer product distributor announced its 2020 full-year (FY20) results late on Friday. By today's market close, the Shiro share price had fallen 6.7% to 97.5 cents. 

Let's take a look at how the company has been performing.

Shriro share price falls on 180% profit increase

The Shriro share price was tanking today despite the company reporting that total revenue across the group increased by 11.2% to $191.3 million during FY20. Shriro markets and distributes a range of brands spanning kitchenware, range hoods, instruments, watches, and BBQs. Although revenue was subdued during the first half due to COVID-19 lockdowns, the second half rebounded strongly.

The company noted that with people unable to travel, more spending went towards household items. Shriro witnessed significant growth in some of its products, such as the Everdure by Heston Blumental range, which grew by 65.2% compared to the prior corresponding period. 

Shriro also continued with its cost-cutting strategy during the year. Operating expenses declined by 11.8%, excluding government subsidies. The combination of increased revenues and reduced costs led to a substantial lift in profit. The company noted a 180% increase in net profit after tax to $18.2 million.

As a result of the plentiful profits, Shriro declared a final dividend of 4 cents per share fully franked. 

Outlook 

In looking to the future, Shriro remains cautious of further COVID-19 lockdowns. However, the company intends to reinstate its marketing expenditure in line with previous years to support future growth.

Additionally, management expects to add additional resources to capture market share. This is assisted by the continuing success of the Omega range, which was rolled out to retailers in the first quarter.

Furthermore, Shriro foresees international BBQ revenue to grow significantly as brand awareness of the Everdure range continues to grow.

At the end of December, the company recorded no debt and $17.6 million of cash on hand. 

Foolish takeaway

Despite underperforming today, the Shriro share price has risen by around 19% year to date and by more than 40% over the past year. Based on the current share price, Shriro has a market capitalisation of around $93 million.

Motley Fool contributor Mitchell Lawler owns shares of Shriro Holdings Ltd. 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.

More on Share Market News

piggy bank at end of winding road
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors enjoyed a lucrative Tuesday session today.

Read more »

A hipster-looking man with bushy beard and multiple arm tattoos sits on the floor against a sofa reading a tablet with his hand on his chin as though he is deep in thought.
Share Market News

ASX 200 dips on RBA interest rate decision

The ASX 200 gave up some of its intraday gains following the latest RBA interest rate announcement. But why?

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Capitol Health, Infratil, Newmont, and Race Oncology shares are charging higher

These shares are having a good session. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Beach Energy, Fortescue, Kina Securities, and Melbana Energy shares are dropping today

These shares are missing out on the good times today. But why?

Read more »

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
52-Week Highs

CBA, DroneShield, and these ASX stocks just hit 52-week highs

These shares are flying high on Tuesday. What's going on?

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

Macquarie shares have 10% upside: Morgan Stanley

Another bullish broker on Macquarie.

Read more »

A woman looks questioning as she puts a coin into a piggy bank.
Broker Notes

Is the ANZ share price 'the best value of the major banks'?

ANZ shares are in the green today.

Read more »

Two kids in superhero capes.
Small Cap Shares

2 ASX small-cap shares I'd buy for massive growth potential

I’m bullish about these two stocks.

Read more »