This ASX 200 stock is gaining after its dividend was binned. Here are all the details

United Malt posted a $13.8 million loss for the first half.

Key points
  • The United Malt share price is lifting 1.6% to trade at $4.42 at the time of writing
  • That’s despite the company ditching its interim dividend and posting a loss for the first half
  • The maltster revealed a $13.8 million loss for the period while its EBITDA fell 17% to $38.3 million

Stock in S&P/ASX 200 Index (ASX: XJO) maltster and takeover target United Malt Group Ltd (ASX: UMG) is defying the market's downturn despite the company scrapping its interim dividend.

Right now, shares in United Malt are trading 1.61% higher at $4.42 on the release of the company's first-half earnings.

Meanwhile, the ASX 200 is down 0.5%.

Woman looking at her smartphone and analysing share price.

Image source: Getty Images

Stock in ASX 200 maltster soars despite binned dividend

Here are the key takeaways from United Malt's half-year results:

The company's costs climbed over the six months ended 31 March. It recorded $5.6 million of costs from closing out ineffective currency hedges and exchange rate movements, as well as $2 million of one-off restructuring costs, and $6.8 million of software-as-a-service (SaaS) costs.

Meanwhile, lower demand for beer saw its processing segment's sales disappoint in the first quarter. Though, higher barley prices and improved commercial terms saw the segment's revenue rise 23% to $612.7 million.

What else happened last half?

Of course, the big news from the company last half was the takeover bid posed by Mallteries Soufflet. The French maltster offered $5 per stock to acquire its ASX 200 peer.

United Malt granted the suitor due diligence in March. As foretold in a trading update last month, it realised $3 million of one-off costs associated with the $1.5 billion takeover bid.

Its net debt increased 41% last half to $639.2 million, bringing its net debt-to-EBITDA ratio to 9.8 times. The company has received covenant amendments from its banks to accommodate the temporarily higher ratio.

Meanwhile, its net finance costs more than tripled to $16.4 million on the back of rising interest rates, higher barley inventory costs, and the cost of barley required for its new Inverness facility. The Scottish facility officially kicked off production in late March.  

What did management say?

Commenting on the news seemingly bolstering the ASX 200 stock today, United Malt managing director and CEO Mark Palmquist said:

While the first quarter of FY23 included a continuation of the challenges experienced in the prior year, our financial performance improved markedly during the second quarter.

As we indicated previously, our gross margins have also improved from the progressive implementation of enhanced pricing and commercial terms with our customers which came into effect from 1 January.

We expect this rate of financial improvement to continue into the second half as our contracts better reflect our improved commercial terms.

What's next?

Looking forward, United Malt expected its underlying EBITDA to come in at $140 million to $160 million this financial year.

The ASX 200 stock will return dividends as its earnings improve. It continues to aim to distribute around 60% of its underlying net profit after tax (NPAT) to investors.

Meanwhile, Malteries Soufflet is continuing its due diligence. United Malt will keep investors in the loop on the prospective takeover.

United Malt stock outperforms the ASX 200

The United Malt share price has rocketed 26% since the start of 2023, compared to the ASX 200's 4% lift.

The stock is also trading 11% higher than it was this time last year while the ASX 200 has risen just 1% in that time.

Motley Fool contributor Brooke Cooper 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 Scott Phillips.

More on Consumer Staples & Discretionary Shares

Two happy woman on a couch looking at a tablet.
Consumer Staples & Discretionary Shares

Adairs vs Temple & Webster: Which ASX retail stock wins for October?

Adairs and Temple & Webster both look beaten up, but only one stacks up as the stronger retail buy for…

Read more »

Woman holding several shopping bags.
Consumer Staples & Discretionary Shares

Lovisa vs Baby Bunting: Which ASX retailer is the better buy today?

Lovisa and Baby Bunting face off: which ASX consumer discretionary share deserves a place in your portfolio?

Read more »

Cropped shot of a mature businessman brainstorming and setting financial goals with notes on a glass wall.
Consumer Staples & Discretionary Shares

Tabcorp vs The Lottery Corporation: Which ASX gaming share comes out on top?

Breaking down Tabcorp vs The Lottery Corporation: which ASX gaming stock looks most attractive on dividends, value, and earnings this…

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Consumer Staples & Discretionary Shares

This ASX retail stock is sliding today after a surprise CEO exit

A major shake up has investors selling this ASX stock.

Read more »

A woman sits on sofa pondering a question.
Consumer Staples & Discretionary Shares

Temple & Webster vs Nick Scali: Which furniture share is better?

Temple & Webster and Nick Scali are both ASX furniture retailers — but which looks like the better buy today?

Read more »

Two mature women learn karate for self defence.
ASX Share Market News

Investors get defensive as ASX 200 drifts to a 15-week low

The traditionally defensive consumer staples and healthcare sectors performed best last week.

Read more »

Woman using smartphone to check product details while shopping in a grocery store aisle.
Consumer Staples & Discretionary Shares

Woolworths shares jump 31% in 2026. Is there any upside left?

The supermarket giant is trading in the green again on Friday afternoon.

Read more »

Smiling woman checking out clothes at a shop.
Consumer Staples & Discretionary Shares

Premier Investments vs Myer: Which ASX Retail Stock is Best?

Premier Investments and Myer are retail favourites — here's which ASX stock I think stands out for income and value…

Read more »