Pental Limited (ASX: PTL), today on 26 February 2019, reported the interim results for the half-year ended 31 December 2019. The company reported a net profit after tax of $1.438 million for the half year ended 31 December 2018, an increase of 20.1% on the previous corresponding period. The total sales revenue was $48.025 million, up by 26%. EBIT of the company was reported at $2.085 million, up by 19.6% than the previous corresponding period.
The board declared an interim fully franked dividend 0.70 cents per ordinary share, payable on 27 March 2019, up 17% on previous corresponding period.
The market performance of Australia was driven by distributorships coupled with sales growth in Firelighters, Cleaners and Fabric Softeners. Toilet and personal care categories were impacted by the price pressure. Sales dropped in soaps and body wash due to previously announced strategic decisions to avoid deep discounting and to focus on promotions that maintain sustainable margins.
Sales for the non-distributor business fell by 4.7% from the previous corresponding period on the back of continuing disruptive nature of Pental’s marketplace. The working capital was up $7.7 million compared to the previous year on the back of new Duracell business. Consequently, the company was $0.245 million in overdraft at the end of December.
The cash outflow from operating activities was $5 million; however, excluding the working capital impact of the new Duracell business, it remains healthy. The cash flows continue into the second half of the year as projected, helping the payment of the interim dividend from operating cash flows and remaining debt free.
The retail environment will continue to remain challenging with increased competition, margin squeeze, private label growth and heavy discounting. The brands and market share of the company in key categories, supported by its distribution business, creates a strong base to continue to grow.
The CEO of the company, Charlie McLeish said that the efficient end-to-end distribution channel of the company is a great strength. The network of the company provides great value to other brands seeking to enter the Australian market. New brands such as Pears and Duracell, are being added to the network of the company which will add scale and increase the efficiencies further, thereby creating the opportunity for greater returns to shareholders.
On the price-performance front, the stock of Pental Limited is trading at $0.360 with an increase of ~5.882% during the day’s trade and with a market capitalisation of $46.33 million as on 26 February 2019 (AEST 3:45 PM). The stock has generated a YTD return of 25.93% and posted returns of 13.33% and 3.03% over the last three months, and the one-month period respectively. The stock has a 52-week high price of $0.420 and a 52-week low price of $0.255 with an average trading volume of ~119,851.
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