The Clover Corporation Limited (ASX: CLV) share price has come under pressure on Tuesday following the release of its full year results.
At the time of writing, the specialist ingredients company's shares are down 7.5% to $1.34.
Clover share price sinks on major profit slide
- Sales revenue fell 31.4% to $60.5 million
- Net profit after tax down 52% to $6 million
- Dividend of 0.5 cents per share declared
- No guidance given due to uncertainty
What happened in FY 2021?
For the 12 months ended 31 July, Clover was impacted by challenging trading conditions, leading to sharp declines in sales and profits.
The company notes that many of its traditional infant formula customers have found market conditions and the China market difficult to navigate. This is due to their access to market via the Daigou channel, which relies heavily on Chinese students and tourists, reducing dramatically through COVID-19 conditions.
One positive was that Clover has added new customers during the year, which has filled some of the gap. However, many of these customers are introducing new products that will take time to get established.
Furthermore, the company notes that it has a strong pipeline of new projects. However, once again, this won't be a quick fix. It highlights that these projects have been delayed due to most customers having their workforce at home, making new product development slow.
What about FY 2022?
Due to the uncertain operating environment, no guidance has been given for the year ahead.
However, management is feeling cautiously optimistic about the future.
It commented: "The fundamentals of the business remain strong with opportunities for growth across markets and segments currently impacted by COVID-19. Clover will launch newly developed products and re-engage with customers to progress the new product and application pipeline in China, Europe, and the USA as restrictions ease."
"To support future growth, Clover will also increase vertical integration into its supply chain, establishing partners in supply and logistics and add value through potential strategic acquisition and/or partnership. Clover expects to capitalise on the above opportunities once markets and borders re-open, however the timing is unknown. It is therefore difficult to provide meaningful guidance at this time," it concluded.
The Clover share price is down 35% over the last 12 months.
