Shares: profits hammered
LAYBUY’S minority shareholders will be closely watching what its big owners do next week, with the voluntary escrow on 96,998,888 shares — about 55.6% of the shares on issue — due to come off on Tuesday after it releases its fullyear financial results.
The company’s Kiwi founders, Gary and Robyn Rohloff, collectively own 51,531,420 of those shares coming off escrow.
Australian private equity investor Pioneer owns another 44,450,675 shares. Other senior management held 1,016,793 at the company’s sharemarket float on the ASX but have been able to sell since September last year.
The company has strong growth aspirations, targeting the UK and US markets. But like other buy now, pay later stocks, its share price has been hammered this year.
Laybuy had an initial public offer price of $A1.41 (NZ$1.54) when it listed in September 2020 and its shares soared as shoppers turned to online payments under pandemic lockdown conditions.
But they were trading around A7.5c per share on the ASX on Thursday. At that value the Rohloffs’ stake would be worth just $A3.86 million.
That’s not much compared to the $A72.66 million their stake was worth when the company listed.
A Laybuy spokesman confirmed the Rohloffs would not be selling their shares but could not comment on what Pioneer would do.
Buy now, pay later companies are facing increasing pressure, especially with talk of the need to regulate the sector.
This week Swedish buy now, pay later company Klarna announced it was cutting 10% of its workforce.
The Laybuy spokesman said it had no plans to cut staff as its Australian and New Zealand businesses were already profitable.
In March the company downgraded its revenue growth forecasts to between 43% and 48% for the 2022 full year. Its earlier guidance was 60% to 70% growth.
In FY2021, Laybuy reported revenue of $32.6 million, up from $13.7 million the previous financial year. But losses widened from $16.1 million in FY20 to $41.3 million in FY21.
Tower hit by big claims
A number of large claim events has dragged down the profits of insurer Tower.
The company made an aftertax profit of $2.98 million for the six months to March 31, down from $11.1 million in the same period a year earlier.
Excluding large events, its underlying profit was $18.2 million, up from $17.1 million.
Tower chief executive Blair Turnbull said large event costs over the halfyear were substantial, adding up to $17.9 million compared to $9.3 million the year before.
This included $7.6 million from the eruption of Tonga’s volcano and subsequent tsunami, $3.6 million from Cyclone Dovi which hit New Zealand in February, and $6.7 million from rainstorms which hit the North Island in March.
Tower has reinsurance cover but this only kicks in once costs rise to over $20 million in any given year. It is covered up to $40 million.
‘‘Tower is acutely aware of the ways climate change is increasingly affecting our communities,’’ said the company.
‘‘We are responding. By expanding our riskbased pricing policies and focusing on a highquality reinsurance programme, we ensure Tower remains in the strongest possible position to continue protecting both our customers’ and shareholders’ interests.’’
In November last year Tower brought in riskbased pricing for floods. So far it had moved 70,000 customers to the new pricing model, Mr Turnbull said.
Tower’s gross written premiums rose from $194.6 million to $216.1 million while its net earned premiums rose from $167.8 million to $173.7 million.
The insurer increased its customers by 6% to 312,000 and saw its management expense ratio fall from 37.1% to 35.8%.
Mr Turnbull said Tower’s operational business performance had improved over the halfyear through growth, improved efficiencies and effective management of inflationary pressures.
‘‘By building deeper, more engaging relationships with customers Tower is experiencing consistent growth in both premium and customer numbers yearonyear.’’
Tower maintained its fullyear guidance of between $21 million and $25 million underlying net profit.
It declared a halfyear dividend of 2.5c per share.
Brokers’ take on FPH
Fisher & Paykel Healthcare’s 28% decline in annual net profit was largely expected, with secondhalf revenue trends highlighting a material decline while operating costs continued to grow, said brokers Forsyth Barr.
In its result, F&P said over the past two years the company had supplied $880 million of hospital hardware, the equivalent of about 10 years’ hardware sales before Covid19, essentially giving the company a new, higher base.
But looking ahead, the company gave few clues in terms of earnings guidance.
‘‘Full year 2023 guidance was unsurprisingly opaque, reflecting the ongoing lack of visibility on the direction of revenue; particularly around the utilisation of its materially increased installed base,’’ Forsyth Barr said.
‘‘We continue to view FPH as wellpositioned for longterm growth with doubledigit earnings growth forecast from 2023.
‘‘The key question around what the new earnings base may represent was made no clearer.’’
It was a similar message from Jarden.
‘‘Looking forward, FPH provided no initial earnings guidance for 2023 but it did announce new products, an expanded TAM (total addressable market ) and higher confidence in achieving its longrun growth opportunity, specifically with Covid accelerating hardware placement and lifting awareness of high flow therapy,’’ Jarden said.