Reporting season 2022: Brambles, Kogan announce inflation hit

Posted: 25 February 2022 10:32 am
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Reporting season is underway with investors gaining a snapshot of how businesses are actually performing.

On another day of reporting season, this time in the middle of a conflict between Russia and Ukraine, the market as a whole is expected to fall. Businesses that miss their targets today are especially likely to feel the brunt.

Today's agenda is headlined by Australia's largest buy now pay later company, a health insurer and an online retailer.

Here's what you need to know.

Block

Starting out with technically a dual-listed business, payments provider Block.

The company formerly known as Square, which owns Afterpay, came to market with some better than expected results.

Despite a tough 12 months for Block and its rivals including Zip, the company revealed Q4 earnings of US$4.08 billion, compared with expectations of US$4.01 billion.

The company, which also operates pay terminals, said it is benefiting from consumers returning to physical brick and mortar stores following the pandemic-induced fears continuing to disrupt.

Looking forward, Block said its acquisition of Afterpay will be critical in its growth acceleration, as it will incorporate the BNPL features into its well-established seller and cash-app ecosystem.

Shares in Block soared 40% at the opening to $161.80.

Medibank

Next up we have private health insurer Medibank, which announced mixed results to the market.

Its key figures show profits before tax fell 2.7% in the 6 months to 31 December, while net investment income fell 57%.

Net profits after tax were also down 2.7%.

But the company will pay shareholders a fully franked 6.1 cent dividend.

Medibank's CEO David Koczkar notes future growth could come in the form of younger Aussies getting insurance.

"Resident policyholders have grown by 3.3% over the last 12 months and 1.5% or 28,100 over the 6-month period. We grew a further 4,500 in January, in what is an extremely competitive market," he said.

"Much of this growth continues to be driven by younger people and those who haven't held private health insurance previously."

Shares in Medibank opened flat at $3.17.

Brambles

Pallets, crates and containers specialist Brambles highlighted the pressure that inflation is putting on the market, as supply chains continue to wreak havoc on businesses.

According to its latest figures to 31 December, sales revenue increased 8% while underlying profits lifted 4%.

However, excluding short-term transformational costs, underlying profit increased 9%.

Cash Flow from Operations decreased US$260.5 million, reflecting increased capital expenditure, which included lumber inflation of US$270 million and US$80 million of pallet purchases deferred from FY21 due to lumber and pallet availability constraints.

The company has declared a 10.75 US cent dividend and also announced plans to buy back its own shares.

Shares in Brambles opened flat at $9.90 per share.

Kogan

Another business highlighting the pressures of supply chain interruptions is Kogan.

The online retailer announced its number of active customers has now increased to over 4 million, but it was not enough to offset loses.

In fact, despite increasing its gross sales by 9.4% to $698 million and revenues growing by 1.3% to $419.5 million, profits fell.

The business said gross profit in the 6 months until 31 December is down 8.1% while statutory net profit after tax and earnings per share was down $11.9 million and 0.11 cents respectively.

Commenting on Kogan.com's performance over 1HFY22, founder and CEO Ruslan Kogan notes the company's strong ambition moving forward.

"We have set our sights high, with a 5-year goal of $3 billion in annual gross sales, which the first-half results show we are progressively on our way to achieving.

"Over the last 6 months we have invested heavily on expanding product choice, value and speed of delivery for our over 4 million Aussie and Kiwi shoppers to delight them each and every step of the way," he said.

Kogan said it was temporarily pausing trading.

PointsBet

Online entertainment and gaming company Pointsbet announced increasing losses as the company continues to expand its operations throughout the United States.

With the US opening up to legalised gambling one state at a time, businesses are vying for their market share. According to Pointsbet the total market is US$70 billion by 2033.

But this is coming at a cost, with Pointsbet confirming its earnings before interest, taxes, depreciation and amortisation have nearly doubled to $130.6 million, compared with $71.3 million last year.

However, gross profit also doubled to $54.7 million, while net revenue is up to $139.1 million from $75.1 million.

The company is also highlighting stronger days ahead, after opening up in the lucrative New York, Pennsylvania and Canadian markets.

Shares in Pointsbet are up 3% to $3.67.

At the time of writing Cameron Micallef owns shares in Pointsbet.

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