Virus forces re-think

Carbon Revolution revenue, share price hit hard

INVESTORS in a $25 million Carbon Revolution capital raising have seen their investment almost instantly halved.

Issued at $1.50 a share, the capital raising will help the Waurn Ponds company navigate the coronavirus outbreak which is stressing car makers’ supply chains and has forced Ferrari into a two-week production shutdown.

It is expecting earnings before income tax to be about $5 million down on forecast.

Last Monday, shares in the carbon fibre wheel maker dropped to as low as 83 cents as its horror share price slide of the past few weeks continued.

On Friday shares in Carbon Revolution had recovered a little to be trading at $1.12. On January 24, Carbon Revolution reached a high of $4.60, about 30 per cent up on its opening price on listing in November

But more than $300 million has since been wiped off the value of the company, with the price dropping to $1.31 when the non-underwritten institutional share placement was announced on March 18.

Carbon Revolution has downgraded its revenue forecast and no longer expects to be running at a pre-tax profit by the fourth quarter of this financial year. As the coronavirus pandemic takes hold in Australia, the company has also pulled back recruitment activity related to its plan to increase production volumes.

“This measure reflects our commitment to the safety of our team and the board is of the view that it is in the best interests of the business overall,” the company said in a statement.

“This decision relating to recruitment will impact the company’s ability to deliver the sales volume included in its FY20 prospectus forecast.”

Carbon Revolution is now forecasting total revenue for the financial year to come in about 87 per cent of the FY20 prospectus forecast, or about $54 million.

“This is a significant reduction but remains a 260 per cent increase on the prior year,” the company said.

Following the new share placement, Carbon Revolution offered existing eligible shareholders the opportunity to participate in a non-underwritten share purchase plan, subject to an aggregate cap of $3 million.

Chairman James Douglas said the capital raising had been well supported by existing institutional shareholders whose participation validated the company’s measured response to the current environment.

“Our primary objective is to keep our workforce safe and to ensure that Carbon Revolution is well positioned to deal with the impacts of the COVID-19 virus,” Mr Douglas said.

“We feel that this approach will give us the best chance of still meeting the needs of Carbon Revolution’s customers while we carefully manage the risks that this virus poses to our team and operations.”