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Asaleo Care Limited (ASX:AHY), a company from the consumer staples sector and into the business of manufacturing, marketing and distributing consumer products across the Feminine Hygiene, incontinence hygiene, baby hygiene, consumer tissue and professional hygiene product categories, has announced its full-year results for the period ended 31 December 2018.
During the period, from the continued operations, the company reported a fall in the underlying revenue by 2% to $407.8 million as compared to the previous corresponding period. There was a fall in the underlying EBITDA by 17% to $81.5 million and underlying EBIT by 20% to $65.8 million. The underlying NPAT also reduced by 26% to $37 million. As a result, the EPS also reduced by 26% to 6.8 cents per share.Â
From the Continuing and Discontinued Operations, the company reported a fall in the underlying EBITDA by 35% to $80.6 million. The EPS reduced by 50% to 5.4 cents per share. The return on equity during the period was 17.7%, net debt to EBITDA during the period was 3.25x.
Based on the results of FY2018, the Chief Executive Officer and Managing Director, Sid Takla stated that the FY2018 was a turning point for the company. After the comprehensive strategic review of the entire business, he stated that the company agreed to divest the lower margin of the Australian Consumer Tissue business. By divesting the lower margin of the Australian Consumer Tissue business, Asaleo Care Limited will be able to focus on its core, higher margin and less capital-intensive businesses which includes Personal Care and B2B. In this regard, the sale to Solaris Paper is expected to get completed by Q1 of FY2019 which will strengthen the balance sheet of the company. It will also allow the company to invest in higher margin, higher growth brands of the company. The company has also renewed its focus on the customers as well as improved its relationship with the key customers.
During the period, the company faced pressure from the higher pulp prices and lower year on year sales in Baby Care and Feminine Care, which decreased the EBITDA by 21.1%. However, its Night Pants and Lights by Tena, which were the recent products launched by the company, drove the strong performance in the Incontinence Retail group, which pushed the revenue up by 4.8%.
In spite of improved product in the market, as a result of heightened competitive activity in NZ, the baby care product continued to receive challenges in regaining the market share.
There was a decrease in B2B EBITDA by 12.4% to $45.1 million. Incontinence Healthcare gave a strong performance during the period, and Professional Hygiene reported modest growth in revenue. But the main reason for the decrease in the EBITDA was the increased pulp cost by approximately $12 million.
In FY2019, the company is targeting its EBITDA to be in the range of $80 million to $85 million as per the new accounting standard for leases. Any reduction will be driven by the commitment to invest in the growth of the brands.
As per the consolidated P&L statement of the company for the year ended 31 December 2018, the company made a loss of $108.679 million.
The balance sheet highlighted that there was a decrease in the net asset base as a result of increased total liabilities of the company. By the end of the FY2018, the net cash and cash equivalent were $67.355 million.
In the last six months, the stock has generated a positive return of 47.89%. By the closure of the trading session on 20 February 2019, the closing price of the stock was A$0.935 with the market capitalization of A$570.28 million and approximately 543.12 million outstanding shares.
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