GUD (ASX:GUD) share price on watch after reporting 32% revenue growth

GUD's shares will be in focus on Wednesday…

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Key points

  • GUD has released its half year results
  • While it has delivered strong revenue growth, this was predominately driven by acquisition
  • GUD's earnings appear to have fallen short of the market's expectations.

The GUD Holdings Limited (ASX: GUD) share price will be one to watch on Wednesday.

This follows the release of the diversified products company's half year results after the market close.

GUD share price on watch following mixed half

  • Revenue up 32% to $332 million
  • Underlying net profit after tax (excluding Job Keeper) up 14.7% to $35.2 million
  • Underlying earnings per share down 15.6% to 30.4 cents
  • Fully franked interim dividend down 32% to 17 cents per share
  • Cash conversion down 30.1% to 63.3%

What happened during the first half?

For the six months ended 31 December, GUD reported a 32% increase in revenue to $332 million. This was driven by a record performance from its Automotive segment, which benefited from acquisitions. Group organic revenue growth was a more modest 5.7%.

On the bottom line, GUD reported a 14.7% increase in underlying net profit after tax to $35.2 million excluding Job Keeper. This is a touch short of the market consensus estimate of $35.8 million.

As for earnings per share, it fell 15.6% to 30.4 cents due to its increased share count following a capital raising to fund the AutoPacific Group (APG) acquisition.

GUD's cash conversion of 63.3% fell short of its mid-term targets. However, there was a good reason for this. Management advised that this reflects the strategic commitment to increase inventories to address supply chain disruptions. Cash conversion is expected to improve in the second half despite elevated inventory levels as the seasonal spike for Chinese New Year unwinds.

Management commentary

GUD's Managing Director, Graeme Whickman, commented: "It was pleasing to see such solid organic growth in Automotive sales and Underlying EBIT considering Q1 was the most locked down period since the pandemic commenced. In addition, Automotive was coming off an extraordinarily strong pcp due to a COVID‐19 sales recovery phase experienced in that half."

"It was also exciting to announce and complete the Vision X acquisition and announce the APG acquisition. Both are critical steps in achieving the Group's Portfolio Vision and will be important contributors to GUD's long‐term success."


Management has reiterated the guidance it provided in December. It continues to expect FY 2022 underlying EBITA of $112 million to $116 million before contributions from the Vision X and APG acquisitions.

Including these acquisitions, EBITA is forecast to be in the range of $155 million to $160 million. Though, management has warned that short term challenges remain.

Mr Whickman commented: "Short term challenges remain. The recent spread of Omicron has seen capacity to produce and deliver against sales orders diminished in January, but we remain confident this will be a deferral of demand rather than a loss in sales. If that scenario proves to be correct, we remain on track to deliver on FY22F EBITA guidance of $155 to $160 million."

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. 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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