The Australian share market is out of form on Tuesday with the All Ordinaries index currently down approximately 0.3%.
While that's disappointing, it is nothing compared to the declines being recorded by the two ASX industrials shares listed below.
Here's why they are being sold off today:
Ashley Services Group Ltd (ASX: ASH)
The Ashley Services share price is down 22% to 27 cents. This morning, the integrated provider of training, recruitment and labour hire released its half-year results and reported a 10.8% increase in revenue to $290.8 million but an 83% decline in net profit after tax to $1 million. The company's profits were hit by impairments relating to the Linc business.
The ASX industrials share's managing director, Ross Shrimpton, was disappointed with the half. He said:
The first half result has been challenging. The outcome of the Linc acquisition is disappointing. As with all acquisitions, there was risk associated with the purchase of Linc. We had 18 months to renew the major customer contract or secure new customers and expand within the higher margin Oil and Gas sector. As of today, the business is ongoing, but with minor contracts in hand. Earnings from Linc in FY24 will be negligible.
The value of acquired customer relationships (originally $2.5 million) have been written off in full throughout FY23 and H1 FY24. Goodwill has also been impaired, with its value reduced to $0.35 million during H1 of FY24.
Silk Logistics Holdings Ltd (ASX: SLH)
The Silk Logistics share price is down 13% to $1.55. This follows the release of the logistics provider's half year results. Silk reported a 9% increase in revenue to $276.5 million but a 22.4% decline in underlying net profit after tax to $7.6 million. Management blamed the profit decline on additional right-of-use (property lease) depreciation expense.
Looking ahead, the company expects revenue of $540 million to $560 million and underlying EBIT of $34 million to $37 million. Though, management warned that trading conditions are tough. It said:
Trading conditions are expected to remain challenging for the remainder of FY24. Silk will focus on preserving profitability through increased operational efficiencies, driving organic growth and integration of acquired businesses to realise synergy benefits. Silk maintains a positive outlook with respect to its business development pipeline and its customer value proposition to win further new business.
