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InvoCare hits 6-month low despite profit

Simone Ziaziaris  |  19 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] InvoCare (ASX: IVC) shares hit a six-month low after the funeral and crematorium operator warned it expects flat operating earnings in the 2018 financial year.

InvoCare booked a 37.3 per cent lift in net profit to $97.4 million in the six months to December 31, thanks to gains on prepaid contracts and investment returns with funds under management up 15 per cent at $545 million.

Sales revenue rose 1.4 per cent to $456.9 million, and InvoCare expanded margins to 26.4 per cent, from 24.9 per cent a year ago on the back of better cost efficiencies.

But investors seemed troubled by the company's 2018 outlook, which flagged a temporary decline in market share and warned of low single digit growth for operating earnings on the back of site closures for refurbishment.

Chief executive Martin Earp said the closures were related to the company's investment program to meet changing customer needs.

He said, while costs associated with the program in 2018 will hit earnings, InvoCare has put measures in place to mitigate the impact.

"The operating earnings per share is expected to be flat due to the higher cost of debt and network and brand optimisation-related depreciation," InvoCare said on Monday.

The news sent shares down $1.155, or 7.5 per cent, to $14.305--their lowest level since August.

The company, which operates 250 funeral homes and crematoriums including brands such as White Lady Funerals and Simplicity Funerals, reported a 10.6 per cent lift in operating earnings in the six months to December 31.

The earnings growth was driven by solid performance in the Australian and New Zealand cemetery and crematoria businesses, a focus on reducing costs and the decision to exit the US market in early 2017, InvoCare said.

The company increased its interim dividend from 17 cents, to 18.5 cents, fully franked.

H1 PROFIT UP, SHARES DOWN

* Net profit up 37.3pc to $97.4m

* Sales revenue up 1.4pc to $456.9m

* Interim fully franked dividend up 1.5 cents, to 18.5 cents

 

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is an AAP journalist.

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© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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