It was a tough year for this specialist ingredients company…
The post Clover (ASX:CLV) share price sinks 7% on FY 2021 results appeared first on The Motley Fool Australia. –
At the time of writing, the specialist ingredients company’s shares are down 7.5% to $1.34.
Clover share price sinks on major profit slide
Sales revenue fell 31.4% to $60.5 million
Net profit after tax down 52% to $6 million
Dividend of 0.5 cents per share declared
No guidance given due to uncertainty
What happened in FY 2021?
For the 12 months ended 31 July, Clover was impacted by challenging trading conditions, leading to sharp declines in sales and profits.
The company notes that many of its traditional infant formula customers have found market conditions and the China market difficult to navigate. This is due to their access to market via the Daigou channel, which relies heavily on Chinese students and tourists, reducing dramatically through COVID-19 conditions.
One positive was that Clover has added new customers during the year, which has filled some of the gap. However, many of these customers are introducing new products that will take time to get established.
Furthermore, the company notes that it has a strong pipeline of new projects. However, once again, this won’t be a quick fix. It highlights that these projects have been delayed due to most customers having their workforce at home, making new product development slow.
What about FY 2022?
Due to the uncertain operating environment, no guidance has been given for the year ahead.
However, management is feeling cautiously optimistic about the future.
It commented: “The fundamentals of the business remain strong with opportunities for growth across markets and segments currently impacted by COVID-19. Clover will launch newly developed products and re-engage with customers to progress the new product and application pipeline in China, Europe, and the USA as restrictions ease.”
“To support future growth, Clover will also increase vertical integration into its supply chain, establishing partners in supply and logistics and add value through potential strategic acquisition and/or partnership. Clover expects to capitalise on the above opportunities once markets and borders re-open, however the timing is unknown. It is therefore difficult to provide meaningful guidance at this time,” it concluded.
The Clover share price is down 35% over the last 12 months.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Clover Corporation Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.