G8 Education shares tumble over challenging outlook
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The news: Early learning centre operator G8 Education lifted its half-year profit, but flagged a weaker outlook in a challenging environment, sending its shares lower.
The numbers: Net profit for the six months to June 2024 rose 34% to $20.03 million, while revenue was up 6% to $483.34 million.
It will pay an interim dividend of 2 cents a share, up 33% from a year ago, and announced it would buy back up to 5% of its issued shares.
G8 shares were down nearly 12% at $1.24 in early trading on the ASX.
The context: G8 said its operating revenue was up 5.6% in the half year despite group occupancy rising at a modest 0.8% amid the difficult macro-economic environment and lower enquiries, resulting in occupancy growth softening in the June quarter.
Occupancy has slipped further in the current quarter, even as the company implemented a fee increase. The group expects second-half performance to be more challenging as enquiries remain lower and cost of living pressures remain a key factor.
RBC Capital Markets analyst Wei-Weng Chen said the results were in line with expectations, but indicated that momentum is slowing.
What they said: “While no guidance was provided, management appear to be speaking to a more challenging 2H24 outlook which is corroborated by a deterioration in occupancy trends as compared to the May AGM,” Chen said in a note.
The sources: ASX announcement, RBC Research
