Guidance still spotlights growth but at half the previously forecast rate
Listed food and horticulture logistics specialist Lindsay Australia is starting to feel the contraction in demand for sectors it services, and has subsequently adjusted its earnings guidance for the financial year.
Initially bullish about its prospects with many product lines and supermarkets experiencing a significant surge in consumer activity, particularly during March, which led to an increase in demand for certain freight activities, the company now sees growth at a slower pace.
“These market conditions have now abated, and there has been a material flattening and decline in demand experienced during May and June 2020 resulting in a significant reduction in freight tasks,” director Kim Lindsay says.
“This flattening generally coincides with an end to Covid-19 related panic buying for many products, and as widely reported a decrease in economic activity and conditions within the domestic economy.”
Look back at Lindsay’s Covid commentary from March, here
Lindsay estimates this to reduce its FY2020 earnings guidance from underlying EBITDA (earnings before interest, taxes, depreciation, and amortisation) of around 10 per cent to underlying EBITDA growth of around 5 per cent.
“Underlying EBITDA for FY2019 of $37.72 million excluded additional fuel tax credits relating to prior years of $2.69 million as previously reported,” Lindsay adds.
“Underlying EBITDA for FY2020 excludes the impact of AASB16 that was adopted on 1 July 2019 and one-off restructure costs.
“Despite this extreme market uncertainty, the company remains well positioned to respond to changing market dynamics, the new Sydney distribution hub provides a strong capability to meet market growth challenges in the future, whilst the Company continues to benefit from its expanded rail capacity.”
The firm notes it maintains a significant number of initiatives in response to Covid-19 challenges, with a particular emphasis on customer communications, safety and compliance.
“Whilst the company aims to remain fully operational during this time, we are aware that circumstances are subject to continual change,” Lindsay says.
“Further unforeseeable risks may arise that impact on outcomes or results, including those risks or events outside the immediate Covid-19 related issues.”