National Tyre & Wheel Limited (ASX: NTD) has provided a trading update on the Australian Stock Exchange on 2 May 2019. In Q3 period, the company reported a lower than expected sales volume and revenue due to intense price competition and slow consumer demand. NTD informed that the company is unlikely to recover the shortfall in Q4.
NTD is engaged with the supply of latest generation tyres and wheels to consumers through their retail partners. The company has eleven distribution centres, and seven sub contracted logistics suppliers across New Zealand, South Africa and Australia. The NTD business was first started by Terry and Susanne Smith in 1989 in Brisbane.
The company forecasts its revenue to be between $165m and $167m that indicates unusual market conditions. Also, NTD anticipates its Gross Profit to be about 29 per cent and EBITDA to be between $11.5m to $12.5m.
The company would implement certain initiatives to cope up with the ongoing market conditions including –
- Strengthening price competitiveness by re-alignment of import and wholesale price.
- Making changes in the product mix - promoting SUV markets in Australia and Cooper branded products in New Zealand.
- Expanding ETD Australia’s dealership network.
- Launch of a consumer loyalty program – Dynamix in South Africa.
- Additional development of 360 Partner loyalty programs in Australia and New Zealand.
- Expansion of the wheel business.
- Building new brands and undertaking local area promotional activities.
Early in April 2019, the company notified that it had issued d 237,361 fully paid ordinary shares at a price of $0.51 per share to shareholders, in line with the Dividend Reinvestment Plan of the company.
On 26th Feb 2019, the company released its financial results of six-months period ending 31st Dec 2018. The highlights from the company’s financial report are as follows:
- Sales revenue of $83.8 million in H1 FY19.
- NTD’s gross profit margin was 30.1%, lower than the prior period margin of 32.9%.
- The EBITDA of the company stood at $6.8 million.
- NPATA in H1FY19 was $4.4m while it was $5.0m in H1FY18.
- A strong balance sheet with net assets of $68.8m was recorded by the company.
- Net debt lower than the prior corresponding period at $0.4m.
- Fully franked dividend of 1.25c per share declared was by NTD.
- The Cash and cash equivalents of $13.6 million was noted on 31st December 2018.
The company sold 486,112 tyre units in the half-year in comparison to the 380,264 tyre units sold in the 2018 half year. The 4WD tyre unit segment sales growth in Australia was below expectations despite the achievement of year on year growth by the company.
The stock of the company is currently trading at A$0.390 (as on 6 May 2019, 3:35 PM AEST), up by 1.299%. Around 85,668 shares have been traded today. The 52-week high and low value of the company’s stock was recorded as AUD 1.290 and AUD 0.365 respectively. The YTD return of the stock stands negative at 1.09%. However, in the last 3 months period, the stock has given a yield of 19.74%.
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