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Highlights:
- Natural cosmetic products giant, BWX’s share price has tumbled over 38% on Tuesday morning.
- BWX has downgraded its earnings guidance for FY2022, EBITDA to take a plunge of 76%.
- The company has also announced a fully underwritten capital raise of AU$23 million.
ASX-listed beauty and personal care provider, BWX Limited (ASX:BWX), on Tuesday, announced a capital raise of AU$23.2 million. In addition to this, the company has updated its guidance for the financial year 2022 (FY22) and FY23, following a change in strategic plan considering the changes that have emerged in the marketplace.
Following the update, the share price of BWX dropped by more 38% in early morning trade on the ASX. At 10:37 AM AEST, the shares were spotted trading 38.460% lower at AU$0.72 apiece.
Details of the AU$23.2 million capital raise
According to the ASX-announcement, BWX’s capital raise would comprise:
- AU$13.5 million placement to professional and sophisticated investors.
- Traditional ‘1 for 10’ pro-rata non-renounceable entitlement offer of AU$9.7 million.
The placement and entitlement offer price is AU$0.60 per share, representing a discount of 48.7% to the last closing price of AU$1.17 apiece, recorded on 23 June 2022, the last trading day before BWX announced a trading halt.
Under the offer, the company is expected to issue 38.6 million new fully paid ordinary shares.
BWX said that the proceeds from the capital raise would be used for working capital and debt reduction.
Updated earnings guidance
Image source: © Gramper | Megapixl.com
In its trading update, BWX stated that in past six weeks, numerous key changes have emerged in the marketplace. The retail conditions have become challenging because of more cautious consumers, increased interest rates and inflation. Following this, the company has decided to change its approach and has prioritised the future sustainability of profit margins.
BWX said that the change in approach would have a short-term negative impact on the FY22 financial performance, and therefore, the earning guidance has been downgraded.
- In May 2022, the company said that it expected revenue in the range of AU$233-234 million, which has now been downgraded to AU$206 million.
- Now, the company expects to report underlying revenue of AU$212 million in FY22, which was earlier in the range of AU$240 -250 million.
- Forecasted EBITDA has been downgraded from AU$27-30 million to AU$6 – 10 million.
- BWX expects a negative NPAT of AU$10 to 14 million, and the expected negative NPATA is AU$8 to 12 million.
The strategic change is expected to positively impact the FY23 performance. For FY23, the company expects AU$260 – 270 million in revenue. The expected EBITDA is AU$45 to 49 million.
