G8 Education Ltd (ASX: GEM) shares were trading lower on Wednesday after the company reported a slide in full-year revenue and a large net loss blown out by one-off write downs.
The company said in a statement to the ASX that revenue for the year had come in at $948.2 million, 7.2% lower than the previous corresponding period.
The company's net loss came in at $303 million, which was impacted by a $349.1 million write down of goodwill.
On an underlying basis, EBIT was $93.3 million, down 18.9%.
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Economic headwinds
The ASX 300 childcare company said occupancy was lower than the previous year, "with affordability and the macro environment, including sector challenges, continuing to impact families and enquiries''.
G8 Education Managing Director Pejman Okhovat said it had been a challenging period.
Occupancy continued to be affected by tough market conditions with falling birth rates, increased supply, trust and confidence in the sector impacted by media coverage and families experiencing sustained affordability pressures, resulting in lower occupancy than the previous corresponding period. Despite the fall in occupancy levels, our cost base remained well controlled. Our statutory Earnings Before Interest and Tax (EBIT) resulted in a loss of $234.7 million, with a Net Loss After Tax of $303.3 million, primarily reflecting a non-trading goodwill impairment expense recognised during CY25. We remain committed to balancing our operational needs with shareholder returns and delivered a fully franked total dividend of 2 cents per share paid in October 2025 with no final dividend being paid.
In terms of the outlook, the company said that as at February 15, group occupancy was 54.4%, 7.5% lower than the previous corresponding period and 57.2% year to date, 7.8% lower.
The company said the challenging trading environment was further exacerbated by significant changes to national laws and the regulatory environment, "requiring additional focus and resources''.
The company added regarding the outlook:
Near term operating conditions remain challenging, with ongoing cost of living pressures and no material relief from inflation or interest rates.
The company said other factors affecting demand included the female work participation rate starting to flatten, more supply coming into the sector, cost-of-living issues, and the costs associated with attracting talent.
G8 said over the medium to long term, the market dynamics were encouraging, with state and federal governments looking to create more equitable and affordable early childhood education, and supply starting to decline, with some operators likely to exit the sector.
G8 shares were 2.7% lower in early trade at 35.5 cents.
The ASX 300 childcare company was valued at $282 million at the close of trade on Tuesday.
