GUD Holdings (ASX:GUD) share price down 2% following FY 2021 results

GUD’s outlook appears to be weighing on its shares…

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The GUD Holdings Limited (ASX: GUD) share price is under pressure on Wednesday following the release of its full year results for FY 2021.

In morning trade, the diversified products company’s shares are down over 2% to $11.84.

GUD share price down despite beating guidance in FY 2021

  • Revenue jumped 27.2% to $557 million
  • Organic revenue increased 15.2% to $504.4 million
  • Underlying earnings before interest and tax (EBIT) up 24.8% to $101.2 million versus $98-$100 million guidance.
  • Underlying net profit after tax rose 32.7% to $64 million.
  • Earnings per share up 33% to 67 cents.
  • Fully franked final dividend of 32 cents, lifting full year dividend by 54.1% to 57 cents.

What happened in FY 2021 for GUD?

The GUD share price is trading lower today despite the company delivering an underlying EBIT result slightly ahead of its guidance of $98 million to $100 million.

This strong result was driven predominantly by its Automotive business, which reported a 34.1% increase in revenue. This was underpinned by an 18.2% increase in organic growth and the benefits of acquisitions.

GUD’s Water business delivered growth despite operating in a very challenging environment. It reported a 5.8% increase in revenue for the 12 months.

What did management say?

GUD’s Managing Director, Graeme Whickman, was pleased with the way the company navigated a number of challenges in FY 2021.

He commented: “The financial year has been very demanding but ultimately pleasing. We navigated well through a broad range of COVID‐19 related challenges. The COVID‐ 19 ‘defence and offence’ strategy has played out as expected and our willingness to run far higher inventory levels has served the Group well.”

“Our COVID‐19 employee support programs contributed to achieving record levels of employee engagement in a year where our people have also risen to the challenge of supporting the strong revenue growth. The commitment and application of the GUD team cannot be under‐estimated, and I wish to acknowledge their contribution,” he added.

What’s next for GUD?

The reason the GUD share price isn’t rising today is likely to be its outlook for FY 2022.

Although management spoke very positively about demand in the automotive aftermarket sector, it warned of some near term challenges.

Mr Whickman said: “Short term challenges remain. Volatile trading conditions returned in July and have continued into August 2021. Looking through the lockdowns, and as we cycle a record sales performance in the prior year, our expectation is that automotive organic growth will moderate and normalise over time.”

“We anticipate that a mix of organic growth, the full year contribution for the acquired business, and focused margin management will be the key profit growth drivers in FY22 although volume growth may continue to be impacted by COVID‐19 lock‐downs and mobility restrictions,” he added.

In light of this uncertainty, GUD advised that it was unable to provide guidance at this stage. Instead, it hopes to be in a position to do so at its annual general meeting in October.

Following today’s decline, the GUD share price is now up just over 1.5% since the start of the year.

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