Originally Posted by
Roger
...
Lets just unpack what was said regarding the forecast and when last year.
20/08/15 Company announces an increased profit of $21.9m and says "I am confident that our progress and plans mean we are well placed to deliver a further improvement in earnings in FY16"
28/10/15 Market Update at Annual Meeting - Skellerup expects strong increase in profit and forecasts $24 - $26M for FY16 based on strong first quarter.
18/02/16 Half year result of a modest $9.6m down from 9.7m in the previous comparable period, (what on earth happened to Q2 financial performance if Q1 was so incredibly robust ?) but still forecasting $23m for the FY16 year, i.e. expecting 2H profit of $13.4m.
29/04/16 Lower commodity prices reduce Skellerup forecast earnings to $20-21m. Really, no kidding ! Commodity prices were low all year, directors would have known that. What changed so dramatically between 18/02/16 and 29/04/16 so as to reduce expectations from a second half profit of $13.4m down to $10.9m ? Commodity prices certainly didn't.
Could it simply be a classic case of company directors needing to learn some basic conservatism with their forecasting ? Whatever happened to the old adage of under promising and over delivering...certainly Sir Selwyn has been around long enough to know about this basic principle of good corporate communication ?
Interesting contrast. When the current directors and senior management of AIR occasionally have issued profit forecasts they have no need to revise them over and over again and have delivered on what they promised. Could this be the reason why some directors win prestigious awards at the Deloitte top 200 business awards and others don't ? :p
The $64,000 question is what credibility to attach to this years confidence of profit growth in the light of what happened last year ? I will leave investors to decide that for themselves but for this hound, I expect better forecasting skills from highly paid directors especially for a relatively stable industrial type company for whom it was well known all year that dairy and mining are scraping along the bottom of the cycle. Fact is at the interim result announcement in late February 2016 the directors were forecasting a 2H profit of $13.4M and delivered only $10.9m, nearly 20% less. Interestingly that $10.9m in 2H compares to $12.2m for 2H last year so Fy16 trading was down over 10% compared to FY15 ? Implications going forward ?