ASX 200 (XJO) rises, ResMed (ASX:RMD) FY20 result sends shares lower

The ASX 200 (ASX: XJO) is up 0.72% with reporting season getting into the full swing of things.

COVID-19 continues to capture the headlines with NSW reporting 12 new cases with a warning for Newcastle. Victoria is set to announce 471 new cases according to the ABC.

ResMed Inc’s (ASX: RMD) growth disappoints

The ResMed share price is down 5% despite announcing strong growth its final quarter of FY20, and the full year result.

ResMed announced today that in the fourth quarter of FY20 its revenue rose by 9% to US$770.3 million. Its non-GAAP profit margin improved by 60 basis points (0.60%) to 59.9%. A higher profit margin means it’s more profitable with its revenue, more revenue is turned into profit.

FY20 fourth quarter net operating profit increased by 84% to US$223.2 million. Non-GAAP net operating profit increased 24% to US$243.4 million.

This final quarter contributed to a strong 2020 result. Revenue rose by 13% to US$2.96 billion. The gross margin improved by 80 basis points (0.80%) to 59.8%.

Net operating profit increased by 40% to US$809.7 million and non-GAAP income from operations rose 24% to US$890.9 million.

The main area of growth was revenue in Europe, Asia and other markets in the fourth quarter where revenue increased 22% on a constant currency basis mainly due demand for ventilators due to COVID-19. Software as a service (SaaS) revenue rose 7% in the fourth quarter. Costs reducing by 4% also helped.

The ResMed board decided to declare a quarterly cash dividend of US$0.39 per share.

Nick Scali Limited (ASX: NCK) share price jumps 17.3%

Nick Scali’s shares have surged after reporting its FY20 result.

Nick Scali announced that its sales revenue fell by 2.1% to $262.5 million. Same store sales decreased by 6.7%, however written orders grew 9% and same store sales orders rose 4%. May and June sales orders grew by 72% year on year. The company opened one new store in FY20 – a store in Auckland.

The online store was launched for all categories and achieved sales of $3 million for the last quarter.

The gross margin fell by 20 basis point (0.20%) to 62.7%.

EBITDA (click here to learn what EBITDA means) increased by 2.5% to $65.7 million and EBIT rose by 1.7% to $60.8 million. The EBIT margin improved by 90 basis points (0.90%) to 23.2%.

The revenue decline and EBIT growth led to net profit after tax (NPAT) being flat at $42.1 million. Earnings/profit per share (EPS) was also flat at 52 cents.

However, operating cash flow before interest and tax rose by 22.6% to $75.4 million.

Scentre Group’s (ASX: SCG) painful valuation drop

Scentre is expecting to report its half year result to 30 June 2020 later this month. But management wanted to give an update ahead of the release.

The shopping centre business is expecting to report that net operating cashflow (after interest, overheads and tax) will be more than $250 million for the half year. That’s still subject to external audit as well as board review.

In HY19 the business made net cash flow from operating activities of $629.1 million, so it appears that Scentre has suffered a heavy decline in these six months. Scentre hasn’t received any funds from the Australian Government under its jobkeeper scheme.

Scentre will also announce changes to its property values. It’s expecting its property portfolio to reduce in value by about 10% compared to the value at 31 December 2019. This is largely due to the estimated impact of COVID-19.

Management said that it still has available liquidity of $4.4 billion. The board has decided to revert the remuneration for directors and the management team back to previous levels, effective from August 2020.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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