ASX 200 falls below 7,000, Xero sinks, Afterpay falls

The S&P/ASX 200 Index (ASX:XJO) fell by almost 1% today, dropping below 7,000 points. The Xero (ASX:XRO) share price sank after reporting.

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The S&P/ASX 200 Index (ASX: XJO) fell around 0.9% today to 6,983 points.

Here are some of the highlights from the ASX:

Growth shares flattened

Many of the previously high-flying ASX shares are being pummelled at the moment on inflation worries which may lead to rising interest rates.

Looking at the ASX boards, the Afterpay Ltd (ASX: APT) share price was one of the worst performers as it dropped around 5.5%. A2 Milk Company Ltd (ASX: A2M) was another that fell heavily, just over 5%.

Other growth names also fell by more than 5% including Sezzle Inc (ASX: SZL) and Splitit Ltd (ASX: SPT).

Orica Ltd (ASX: ORI)

Orica announced its FY21 first half result today for the six months to 31 March 2021.

The business reported the sales revenue was down 9% to $2.62 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 25% to $361.5 million and earnings before interest and tax (EBIT) declined 51% to $151.8 million.

Underlying net profit after tax dropped 56% to $73.4 million. Statutory half-year profit fell 54% to $76.7 million.

Orica explained that ammonium nitrate volumes were down 1% on the prior corresponding period at 1.04 million tonnes and down 9% excluding volumes from the Exsa business which was acquired on 30 April 2020.

This profit decline was because of a number of market factors including ongoing COVID-19 disruptions, geopolitical issues and unfavourable foreign exchange movements.

However, the ASX 200 company said it is maintaining a disciplined approach to its balance sheet and capital management, while improving cash generation and controlling debt and gearing. Operating cash flow improved 46% to $158 million, with net debt finishing at $1.7 billion.

The board declared an interim dividend of 7.5 cents per share, which was within its target payout ratio of 42%.

Orica’s outlook is improving, with volumes in the second half expected to be better than the first half. However, COVID-19 and the trade issues between Australia and China continue to be a factor.

The company is expecting FY21 second half EBIT to be lower than the FY20 second half.

Xero Limited (ASX: XRO)

The Xero share price fell around 14% after releasing its FY21 result to investors.

Operating revenue increased 18% to NZ$848.8 million, whilst annualised monthly recurring revenue (AMRR) rose 17% to NZ$963.6 million.

Total subscribers increased to 20% to 2.74 million, bringing the total subscriber lifetime value (LTV) up by 38% to $7.65 billion.

The ASX 200 share’s free cashflow rose 110% to NZ$56.95 million. EBITDA grew by 39% to NZ$191.2 million and net profit after tax rose significantly to NZ$19.77 million.

Xero CEO Steve Vamos said:

As well as responded to our customers’ needs during the pandemic, we continued to execute our strategy, with strong revenue and subscriber growth, completion of a significant capital raise, and the acquisitions of Planday, Tickstar and Waddle.

The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and important of our customers place on their subscription and connection to the broader Xero community is increasing.

Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world. Small businesses make up more than 90% of businesses in the markets Xero operates in, and represent a significant contribution to economic activity, jobs and the community.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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