Ashley Services (ASX: ASH) Faces Challenging Start to FY25, Expects Recovery in Second Half

Highlights

• In FY24, ASH’s revenue increased by 1.3%YoY to AUD 556.5 million, while EBIT declined sharply by 71.4% to AUD 4.8 million.
• In first four months of FY25, ASH’s revenue dropped 9% YoY to AUD 176 million.
• Maximum dividend payout ratio capped at 70% of NPAT until 31 December 2027.

Ashley Services Group Limited (ASX:ASH), an Australia-based provider of tailored workforce solutions, reported an increase in revenue in the financial year 2024 (FY24), slightly by 1.3% YoY to AUD 556.5 million compared to AUD 549.2 million in FY23. However, earnings before interest and tax (EBIT) declined sharply by 71.4% to AUD 4.8 million from AUD 17.0 million in the previous fiscal year.

In FY24, the company observed a fall in demand across its core supply chain, retail, and manufacturing sectors. Additionally, the company secured long-term contracts and new customers and did not lose any significant customers.

Profitability in FY24 was affected by challenges such as reduced hourly margins, an inflationary environment, competitive pressures, and declining government incentives for trainees.

Recent trading update

For the first four months of FY25 ending 31 October 2024, ASH’s key segments experienced declining revenues and profitability due to reduced market demand and funding constraints. Revenue during the period dropped by 9%YoY to AUD 176 million. However, the horticultural sector showed positive growth, partially offsetting broader declines. Unaudited EBITDA and net profit after tax (NPAT) were AUD 2.5 million and AUD 0.5 million, respectively.

Dividend Policy Update

The company announced that its maximum dividend payout ratio would remain capped at 70% of NPAT attributable to shareholders until 31 December 2027.

FY25 Business Outlook

ASH focuses on growing revenues in higher-margin sectors and improving sustainability of profitability. Key initiatives include securing multi-year contracts, expanding business with mining sector customers in the Pilbara region and launching new construction projects in Victoria during the second half of FY25.

The company is also developing a workforce management system to streamline licensing processes, projected to deliver AUD 11.9 million in revenue (excluding non-recurring expenses). Despite a challenging start to FY25, profitability is expected to improve in the second half of the year, with EBIT projected to align with FY24 levels.

Top 10 shareholders of ASH

The top 10 shareholders of ASH have around 65.35% shareholding in the company. Ross John Shrimpton has the highest stake in the firm with a shareholding of 58.54% and Marc Ross Shrimpton has 1.04% shareholding in the company.

Share performance of ASH

ASH shares closed at AUD 0.165 per piece on 27 December 2024. Over the past year, ASH’s share price has dropped by almost 60%, and in the past three months, it has decreased by nearly 13.16%.

52-week high of ASH is AUD 0.45, recorded on 3 January 2024 and 52-week low is AUD 0.155, recorded on 26 November 2024.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 27 December 2024. The reference data in this report has been partly sourced from REFINITIV.

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