Freight at the center of a storm that threatens the entire global economy
Maybe its just me Percy, being a bean counter, perhaps others don't care....but its not really an interim report in the sense of the term normally associated with interim reports we get for all other companies with full financial statements like for example HLG or WHS is it !
This time they don't even tell us what the net loss was and appear to be trying to conceal the fact there was a loss for the period (concealment of relevant financial information is a VERY BAD LOOK) and instead focus on what the total addressable market might be in 2027 (marketing speak ?).. How is that even relevant in a press release when they already talked about that at the annual meeting ? and yet something so important as what is the actual net profit or loss after tax s is not disclosed ? It isn't right...in fact its a long way from being acceptable.
Even if we overlook this highly relevant thing there's one other little nuance to this years press release compared to last year...just a "minor" thing, but one that makes it literally impossible to forecast another "minor" think called earnings per share. They talked about confidence in the second half this year and yet any forecast for FY21 is conspicuously absent from this years announcement, (extract from August 2020 press release follows)
Quote:
Mr McIntosh said PharmaZen is optimistic about the outlook for the full year and is forecasting EBITDA of more than $7.4m on sales exceeding $21m. EBITDA was $5.4m in 2019.
At least that was enough last year so I could have a crack at estimating earnings per share..but this year...nothing to work on. Hmmm
Why no forecast for FY21 this year ? Make of that what you will... Its what's NOT being said with PAZ that left me so concerned. Finally, they talked about currency headwinds causing them headwinds of EBITDA of ~ $1m in the most recent period compared to the same period last year.
I understand the 10 year average currency is in the high 60's so I see last years currency exchange rate in the mid - late 50's US as being an unusual "tailwind" rather than this year being a currency "headwind" per se. Why didn't they lock in forward cover on the exchange rate when the rate was so attractive last year ? Anyway back to currency..to me the current level which is quite normal has implications for the gross margin going forward and I read today in the Herald, (paywalled link below) that current shipping rates have doubled again from already highly elevated level's prevailing in March, (middle of the period they just reported), so freight and logistics will be an even bigger headwind going forward (for the foreseeable future), than they have in the past :eek2:
Getting those 45 containers that are stuck in China shipped here (at any cost), might be easier said than done. https://www.nzherald.co.nz/business/...OF6F4E3GZWFWU/
Finding staff for their increased processing capacity next year might be easier said than done too as many other companies are discovering. Like I said, execution risk is very real and the risk of the very strong growing pains of 2021 flowing over into FY22 as well, is quite real in my opinion.