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

GUD's shares will be in focus on Wednesday…

| More on:
a happy investor with a wide smile points to a graph that shows an upward trending share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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."

Outlook

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.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »