PWR Holdings (ASX:PWH) share price edges lower despite strong earnings

The auto parts company's shares are in reverse today…

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The PWR Holdings Ltd (ASX: PWH) share price is backtracking on Friday afternoon. This comes after the company released its FY21 full-year earnings late last night.

At the time of writing, PWR shares are down 1.18% to $7.52.

Let's take a look and see how the company — which provides cooling solutions for the automotive industry — performed for the period.

PWR share price falters despite strong revenue and profit growth

The PWR share price is dipping lower regardless of the company's sound result for the year ending 30 June 2021. Here are some of the key highlights:

  • Total revenue increased by 20.5% to $79.2 million (FY20 $65.7 million);
  • Earnings before interest and tax (EBIT) lifted 23.6% to $28.9 million (FY20 $23.4 million);
  • Net profit after tax (NPAT) surged 28.7% to $16.8 million (FY20 $13 million);
  • Earnings per share (EPS) jumped by 28.6% to 16.7 cents per share (FY20 13.1 cents); and
  • Final dividend rocketed 50% to 6 cents per share, bringing the total dividend for FY21 to 8.8 cents per share, up 49.2% (FY20 5.9 cents).

What happened in FY21 for PWR?

The company experienced revenue growth across all key markets and geographies. Most notably, the United States segment saw revenue elevate 41.9% year-on-year. Further development and commercialisation of emerging technologies also contributed to the solid result, up 112.7% year on year.

PWR did note however, the total revenue was partially offset by unfavourable currency exchange movements.

In other moves possibly affecting the PWR share price, COVID-19 continued to have an impact on the company's business during FY21, driven by customers reducing or closing their operations. Also, some relevant sporting events around the globe were either cancelled or postponed.

What did management say?

PWR managing director Kees Weel commented on the robust achievement:

The benefits of our investments made in FY20 and FY21 in both people and capital equipment has enabled us to capitalise on growth opportunities and together with our AS9100 aerospace and defence quality certification, positions us well for the future.

The continued growth in PWR North America through the delivery of OEM and emerging technology programs, together with a strengthening automotive aftermarket, has resulted in improved financial performance. Capacity utilisation at PWR North America is expected to continue to improve through FY22.

What's next for PWR and its share price?

Looking ahead, PWR stated that uncertainty is likely to persist for some time as it expects to continue facing challenges due to COVID-19. This could have an effect on the PWR share price.

Nonetheless, the company is forecasting growth to run into FY22 and beyond. Headcount is expected to be expanded from 363 to more than 450 personnel by December 2022.

PWR did not provide earnings or profit guidance for the FY22 financial year.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended PWR HLDING FPO. 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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