The Codan Limited (ASX: CDA) share price has been a very poor performer on Thursday following the release of its full year results.
At the time of writing, the metal detector-focused technology company's shares are down 12% to $15.52.
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Codan share price crashes lower after CEO exit overshadows record profit result
- Total revenue up 25.6% to $437 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 34.8% to $139.8 million
- Underlying net profit after tax up 52% to a record of $97.3 million
- Fully franked full year dividends of 27 cents per share, up 46% year on year.
- CEO Donald McGurk to retire within the next 9-12 months
What happened in FY 2021 for Codan?
Despite what the Codan share price performance might indicate, the company was in fine form in FY 2021 thanks to its Metal Detection segment.
The key segment generated revenue of $326.5 million for the 12 months. This was an increase of 38.1% year on year and means the segment now contributes 75% of total revenue. Management advised that this reflects significant growth across all market segments, with both recreational and gold mining categories having record sales years. It also revealed that Countermine sales rose 34% year on year.
This offset weakness in the Communications segment, which reported an 8% decline in revenue to $95.5 million. Although its LMR business achieved another record performance, the Tactical Communications business continued to be impacted by COVID-19.
Finally, the company's Tracking Solutions segment contributed $15 million of revenue for the year. This was almost double FY 2020's contribution. However, this business has now been sold to Caterpillar. Management made the decision after the business failed to scale to a level that supported the ongoing investment required for a technology-based business.
What did management say?
Outgoing Codan's Chief Executive, Donald McGurk, was pleased with the company's performance.
He said, "As a result of our strategy to strengthen and invest in our core business through releasing new products and broadening our geographic footprint, we were pleased to deliver another record year."
What's next for Codan?
Also failing to keep the Codan share price from sinking today was management's positive outlook.
While no guidance was given for FY 2022, it believes Codan remains well positioned for another successful year in FY 2022. It also notes that the new financial year has started strongly and is in line with the FY 2021 run rate.
However, the company may be navigating part of the new financial year without its long-serving CEO Donald McGurk. He has advised the Board today that it is his intention to retire from his role as sometime within the next 9-12 months.
Mr McGurk will remain as Managing Director until such time as a successor is appointed to ensure a smooth transition.
Codan share price performance
Although the Codan share price has fallen heavily today, it is still smashing the ASX 200 in 2021.
Since the start of the year, the Codan share price has risen 38%. This is more than triple the ASX 200's return over the same period.
