ASX 200 (XJO) flat, Clover (ASX:CLV) share price sinks

The ASX 200 (ASX: XJO) is currently flat after initially being up in morning trade.

Clover Corporation Limited (ASX: CLV)

Clover reported its FY20 result this morning.

Clover reported that its sales revenue increased by 15.1% to $88.3 million. Management said that the improved revenue was thanks to new customers, new products and geographic expansion, whilst maintaining the base of the business.

The company saw revenue growth across all markets, with infant formula demand growth as well as increased interest in the health benefits of omega 3 fatty acids, leading to new products. The EU market has grown substantially as new and existing infant formula manufacturers adjust their formulations to meet the new EU standard for infant formula. The USA was showing promising growth, though many projects are on hold due to COVID-19.

The EBITDA (click here to learn what EBITDA means) rose by 35% with operating expenses only rising by 10.7% to $11.4 million.

Clover reported that its net profit after tax (NPAT) grew by 23.6% to $12.5 million. The company has continued to invest in research and development,

It increased its final dividend by 5% to 2.5 cents per share.

The company benefited from pantry stocking during FY20, with demand returning to normal. COVID-19 impacts could both positively and negatively affect Clover in FY21.

It continues to target new customers in Europe and it’s restarting new product development in the USA.

Clover said it’s increasing its vertical integration in the supply chain, establishing partners in supply and logistics. It’s also working on new products to access new markets and applications. Clover said its concentrated DHA powders have won additional business in a range of new applications including bread, yoghurt, health bars and sport nutrition.

The company may look to grow profit with a strategic acquisition and/or a partnership in the future.

Fonterra Shareholders’ Fund (ASX: FSF)

It announced strong growth in its FY20 result today.

Fonterra reported that its normalised gross profit grew by 6.6% to $3.2 billion,

Its normalised EBIT (click here to learn what EBIT means) grew by 8.25% to $879 million.

Actual EBIT grew by $1.2 billion to $1.1 billion. It reversed from a loss of $100 million in FY19.

Normalised profit after tax grew by 45% to $382 million and reported profit after tax jumped by $1.3 billion to $659 million. It generated normalised earnings per share (EPS) of 24 cents.

It generated free cashflow of $1.8 billion, up by $733 million from FY19.

Fonterra said that the final cash payout for the 19/20 season was $7.19 per kgMS with the final farmgate milk price being $7.14 per kgMS.

Fonterra’s net debt finished at $4.7 billion, down $1.1 billion. It announced a final dividend of 5 cents per share. Fonterra expects to keep paying dividends, assuming normal operating conditions.

Fonterra has provided FY21 guidance of 20 cents to 35 cents, so normalised profit could fall or rise materially in this year.

The forecast farmgate milk price range is between $5.90 per kgMS to $6.90 per kgMS.

Other news

The team over at Rask Media have covered the rest of today’s news, so make sure you head over there for more ASX share market coverage.

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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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