Before the commencement of the AGM on Wednesday 31 October 2018, BWX Limited (ASX: BWX) made an announcement that for the 2019 financial year (FY19) the company expects that earnings before interest and tax (EBITDA) similar to the FY18 EBITDA of A$40.3m. The company also expects certain earnings which will amount to approximately 70% of FY19 EBITDA. Myles Anceschi who is the CEO and MD of BWX states that in the beginning of FY19, the company has suffered a significant disruption and loss of business momentum as a result of failure in the management buyout (MBO) process. There was a significant loss of management time and the resources in the MBO process which ultimately hampered the other parts of several key projects.
The ERP program was expected to go live on 1 July 2018. However, as a result of extended delay this program, it was scheduled in between mid to late August on order to return to its normal operations. However, it turned to be a failure and the program got extended until early October. This resulted in the loss of the domestic sales followed by higher operational cost for the Sukin and Nourished Life business units. There was also a significant delay in the roll-out of Multi-brand selling platform which resulted in loss of sales. The key personnel appointments also got delayed for the leadership teams in APAC and North America. The Mineral Fusion rebranding project got postponed till 01 Jan 2019. There was also some temporary impact seen in terms of sales and cost in case of relocation of the Nourished Life Warehouse and also the association of 4 USA Warehouses to 1.
All these initiatives taken by the company are important in order to sustain future growth and also generate cost efficiencies and operating leverage. In spite of all these delays, all projects are on track and about to complete except North American roll out of ERP which is expected to commence in Q4 of FY19. Mr. Anceschi also adds that there was a lot of hindrances in Q1 of FY19, however post implementation of MBO process, the team got re-energized followed by building of momentum. He says that the hindrances in Q1 will not impact Q2 FY19 with the business operating at an improved capacity. Q2 FY2019 will see the upgradation in execution of group procurement programs. There will also be introduction of 3rd party manufacturing for its segment of the Andalou Naturals brand production. There is a growth in the various categories in all active markets and also the market shares maintain its leading position for all core brands
Since the inception of the company, the company’s performance is 51.02%. However, for the past one year, the performance of the company is negative which is -52.82%. For the year ended 30 June 2018, the company made a net profit of A$19.216 million. The total asset of the company is A$361.821 million and total liabilities of A$91.793 million. It shows the company’s ability to clear its long-term obligations. The total current asset of the company is A$80.802 million and total current liabilities worth A$37.048 million. This indicates that company can also clear its short-term obligations. The total shareholders equity is A$270.028 million. The cash inflow from the operating activities worth A$4.324 million. The cash used in the investing activities was A$100.394 million. The net cash inflow from the financing activities was A$104.031 million. The net cash and cash equivalent at the end of the year was A$19.892 million.
The current market price of the share is A$2.860 with a market capitalization of A$414.72 million and PE ratio of 19.65x.
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