Waste manager Bingo Industries has confirmed a half-year earnings hit as the nation’s property downturn sends ripples through the building industry.
Net profit for the six months to December 31 fell 25 per cent to $13.4 million, down $4.4 million from a year ago, despite revenue for the period jumping 24.4 per cent to $176.4 million.
Bingo flagged the slump this month on weak building waste growth, with full-year underlying guidance cut to $92 million to $96 million from initial predictions of $108 million to $112 million.
The company’s share price effectively halved on the warning.
The company is also bracing for news on its proposed acquisition of Dial-a-Dump, which is contingent on findings by the consumer watchdog, set to be released on Thursday.
Bingo said on Tuesday its underlying earnings margin was down 25.5 per cent, a further 200 basis points below forecast, driven lower by a number of sites being offline for redevelopment, lower margins in the Victorian business and a faster than anticipated softening of the residential market.
‘The group has seen increased market competition that led to reduced prices whilst increased costs have reduced margins,’ the company said in a release.
Bingo’s total costs for the half grew by 36.1 per cent to $157.6 million on increased volumes, tipping costs, fuel and toll fees, as well as staffing and machinery expenses.
Nontheless, managing director and chief executive Daniel Tartak said the outlook remained positive, and that FY20 would be ‘transformational’ for Bingo.
‘We expect to see the benefits from the significant capital outlay over the last 12 months on our redevelopment program as our key assets come back online, most notably our recycling and landfill asset at Paton’s Lane and our advanced recycling facility in West Melbourne,’ Mr Tartak said.
‘We also expect the introduction of a QLD levy to be positive for our business and there will be a Bingo price increase early in FY20 to offset increased operating costs experienced in FY19.
Bingo will pay an interim dividend of 1.72 cents per share, fully franked.
Shares in the company were trading 3.13 per cent higher at $1.32 at 1322 AEDT, down more than per cent from $2.30 before the earnings downgrade.
BINGO FIRST-HALF PROFIT IN THE DUMPS
* Net profit down 25pct to $13.4m
* Revenue up 24.4pct to $176.4m
* Maiden interim dividend of 1.72 cents per share, fully franked