There were some ASX shares that reported very strong profit growth in the reporting season we’ve just seen, including Adairs Ltd (ASX:ADH).
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Reporting season is now over. There were some ASX shares that were able to double their profit year on year.
It has been quite a stunning 12 months. COVID-19 has really hurt some industries like airlines and travel, whereas other companies have seen high levels of growth.
The below three businesses were all able to (at least) double their profit compared to the prior corresponding period:
Adairs Ltd (ASX: ADH)
The home furnishings business was able to report that it delivered record sales and profitability despite 43 Melbourne stores being closed for half the period. Sales and underlying earnings before interest and tax (EBIT) exceeded the December 2020 guidance after adjusting for the $6.1 million repayment of the jobkeeper wage subsidy.
The ASX share showed that group sales increased by 34.8% to $243 million, with group online sales increasing to $90.2 million, representing 37.1% of overall sales. Mocka sales, which are 100% online, grew 44.4% and Adairs online sales went up 95.2%.
Not only did sales grow quickly, but the gross margin improved by 500 basis points, which helped the underlying group earnings before interest and tax (EBIT) grow by 166% to $60.2 million.
Statutory net profit after tax (NPAT) rose 233.4% to $43.9 million.
Nick Scali Limited (ASX: NCK)
The furniture retailer ASX share also saw strong levels of growth in the first half of FY21.
It reported that sales revenue went up by 24.4% to $171.1 million. The gross profit margin improved by 180 basis points to 64%.
Nick Scali reported that its profit margins improved by a very large amount. Both the EBITDA and EBIT margins increased by 1,270 basis points, to 35.2% and 33.6% respectively.
This helped the ASX share grow its underlying net profit after tax by 99.5% to $40.5 million. The operating cash flow before interest and tax went up 222.3% to $53.5 million.
Nick Scali said that the sales order growth for the group in January 2021 was up 47% compared to the same period last year, representing the largest month of written sales orders in the company’s history. January is traditionally the company’s largest trading month and the sales order bank at the end of January was at an all-time high (which was a further increase on December 2020).
Costa Group Holdings Ltd (ASX: CGC)
The horticultural business is the third ASX share in this article that managed to (at least) double its profit.
Costa said that in 2020 it recovered from drought challenges. The international segment performance was “well up” on the previous year. The Australian category saw sustained momentum through the second half of 2020, which drove earnings. Management pointed to the balance sheet strength and strong cashflow position, which highlights resilience.
The food business generated revenue of $1.16 billion for 2020, which was up 11.2%. Underlying EBITDA grew by 47.2% to $144.8 million. Underlying net profit after tax went up by 108.4% to $59.4 million.
In terms of its outlook, Costa said that demand and pricing across produce categories generally remains strong in 2021. Management said that there is continued focus on its competitive advantages in yield, geographical spread, quality and cost of production.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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