G8 Education shares dip on lower-than-expected occupancy rates
Make us a preferred source
Make us a preferred source on Google
More news: G8 Education shares fell in morning trade as occupancy rates at its childcare centres lowered during the six months to June.
G8 shares were down 2.7% to 89 cents at 11:30am AEST. The stock is down 29.6% over the last 12 months.
RBC Capital Markets analyst Wei-Weng Chen said first-half earnings before interest and taxes were 1.1% ahead of market estimates, driven by good control of employment expenses.
However, occupancy rates were 184 basis points behind forecasts, showing deceleration over the year. Chen said the outlook "screens weak", with spot occupancy down 5.9% compared to the prior corresponding period.
What they said: "In our view, consensus expectations for flat occupancy in 2H25 now screen optimistic," said Chen.
"Management commentary did not provide much comfort on the near term highlighting a challenging macro environment and sector-wide events increasing uncertainty. Despite the weak outlook, GEM are guiding to FY25 earnings flat on the [prior corresponding period], which is largely in-line with consensus expectations."
G8 Education lifts profit 12% as it weathers abuse allegations
The news: G8 Education booked a 12.4% increase in first-half net profit after tax, following weeks of turbulence after a former employee was accused of sexually abusing children at a number of its early learning centres.
The numbers: G8 saw reported net profit lift to $22.5 million from $20 million in the prior corresponding period. Operating net profit was up 6.6% year on year to $25.5 million.
Reported group revenue fell 3.7% year on year to $465.4 million. Occupancy also fell 3.7% to 64.5%.
The company declared an interim dividend of 2 cents per share, level with last year's payout.
The context: G8 said the result was supported by good cost management and strategic procurement activity. The group divested four centres and surrendered three leases during the period.
However, it noted that softer occupancy levels were driven by a "challenging operating environment and recent regulatory uncertainty."
What they said: "Against the macro-economic environment, family enquiry levels have remained broadly consistent with the prior half; however, ongoing cost-of-living pressures continue to impact family affordability, as reflected in lower conversion rates and flattened frequency," said G8 chief executive and managing director Pejman Okhovat.
"While macroeconomic indicators remain encouraging over the forward-looking medium term, the sector continues to operate in a challenging environment."
