Enero Group (ASX: EGG) witnesses margin improvement in Q1FY24 driven by recent cost-cutting initiatives

Highlights

• Enero is an ASX-listed marketing communications services company with market cap of AUD 134.73 million
• In second quarter of FY24, the company expects to maintain margins above 18%
• Today (28 December), EGG shares closed 1.69% up at AUD 1.50 apiece

Enero Group Limited (ASX:EGG) manages a portfolio of communication, marketing and technology businesses. The company’s principal activities include integrated communication and marketing services which comprises public relations, advertising, market research and insights and strategy.

Financial performance

In the financial year 2023 (FY23), the company registered 24.9% YoY growth in gross profit at AUD 241.64 million and net profit surged by 122.4% YoY to AUD 56.47 million. During the reported period, gross revenue stood at AUD 740.20 million, mainly driven by acquisition and NPAT before significant items stood at AUD 24.4 million, underpinned by 51% growth in OBMedia. But this was partially offset by higher amortization, software earnings and interest expenses linked with acquisition.

Recent business update

Through an ASX-update dated 27 December 2023, the company informed that it cancelled 154,741 shares on 22 December 2023 following an on-market buyback.

On 21 December 2023, the company informed that it has entered a  blackout period and this will continue till its half-year results are released on 28 February 2023. During this time frame, the company will not undertake any share buyback.

Outlook

In the first quarter of FY24, the company saw improvement in its operating performance over the previous year despite a decline in its revenue During the reported quarter, the company’s margin improved to 16% driven by FY23’s cost-cutting initiatives.

In 2QFY24, the company expects to maintain margins above 18%.

OBMedia is anticipated to resume the growth in trade after experiencing a revenue reset.

Share performance of EGG

EGG shares closed 1.69% up at AUD 1.5 apiece on 28 December 2023. Including today’s gain, EGG’s share price has decreased by 47.37% in the last 12-month and has dropped by 6.54% in the past three months.

The 52-week high of EGG is AUD 3.16, recorded on 30 January 2023, and the 52-week low is AUD 1.335, recorded on 26 June 2023.

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 28 December 2023. The reference data in this report has been partly sourced from REFINITIV.

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