The business's reputation remains intact.
How can you complain about rent ,after you have done a sale and rent back, when you set the rent to get the sale.?!
Avoid.
The comment below appeared in the recent shareholder letter.
"We are generating cost savings from more efficient warehousing, freight, logistics and restructuring and expect operating costs to be down compared to the prior year, despite increases in rent following the sale and lease back of two sites and inflation pressures."
I read this as saying (fairly poorly) that the savings achieved were of a sufficient size to more than fully offset the rent increases created from the sale and leaseback and some unquantified inflation pressures.
The comment below appeared in the recent shareholder letter.
"We are generating cost savings from more efficient warehousing, freight, logistics and restructuring and expect operating costs to be down compared to the prior year, despite increases in rent following the sale and lease back of two sites and inflation pressures."
I read this as saying (fairly poorly) that the savings achieved were of a sufficient size to more than fully offset the rent increases created from the sale and leaseback and some unquantified inflation pressures.
Shareholder letters, like company newsletters to employees, always make every thing sound wonderful. It pays to think critically and question every clause and try to read between the lines. No figures given of course and it is the cost savings versus revenue increase/decrease that counts.
The summary from the trading update on 20 May is pertinent.
•Positive momentum being seen from focus on customer service and turnaround strategies.
•Steel & Tube has grown market share with year on year volumes and sales continuing to improve, however pricing pressure and product mix are impacting second half margins.
•FY18 Normalised EBIT1 has been restated and reduced by approximately $4m following further analysis of FY18 inventory write-offs. This lowers the original FY19 forecast EBIT from $25m to approximately $21m.
•Taking market conditions, trading performance and the inventory adjustment into account, the company now expects FY19 EBIT to be between $15.5m to $17.5m. This is an increase of approximately 20% to 35% on the restated FY18 Normalised EBIT (excluding Plastics) of $13m.
•Steel & Tube’s Board is confident in the medium to long term outlook for the company and anticipates paying a final FY19 dividend in line with its dividend policy.
Dividend policy these days is for 60-80% of NPAT and so shareholders can at least expect a profit for the final half, although the indications are that the final divvy may be down from the interim as a result of reduced margins.
EPS 0.068, PE ratio close to 14 based on SP 0.94. The PE is highest since 2013 as per my calculation. Given the fact STU operate in a very competitive market, I'm cautious if they can achieve $35-40m EBIT by FY21 as mentioned at 2018 AGM.
EPS 0.068, PE ratio close to 14 based on SP 0.94. The PE is highest since 2013 as per my calculation. Given the fact STU operate in a very competitive market, I'm cautious if they can achieve $35-40m EBIT by FY21 as mentioned at 2018 AGM.
I know they have bold plans etc etc etc but one would need to be totally optimistic in thinking they will achieve that $40m if the last 5 years is anything to go buy
Nice of them to proudly put this in the AR
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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Originally Posted by percy
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