The Codan Ltd (ASX:CDA) share price is hitting a new record high after delivering strong profit growth. Here’s what you need to know…
The post Here’s why the Codan (ASX:CDA) share price just hit a record high appeared first on The Motley Fool Australia. –
The Codan Limited (ASX: CDA) share price has continued its impressive run and charged higher again on Thursday.
In afternoon trade the electronic products company’s shares are up 7.5% to a new record high of $14.00.
This latest gain means the Codan share price has now rallied 72% higher over the last 12 months.
Why is the Codan share price at a record high?
Investors have been fighting to get hold of Codan shares today following the release of its half year results.
For the six months ended 31 December, Codan reported a 14% increase in sales to a record $194 million. This was driven by a significant jump in metal detection product sales, which offset weakness in communications product sales due to COVID headwinds.
On the bottom line, the company delivered a record half year net profit after tax of $41.3 million. This was up 36% on the prior corresponding period.
At the end of the period, the company had a net cash position of $111 million.
In light of this stellar performance and its strong balance sheet, the Codan board has declared a fully franked interim dividend of 10.5 cents per share. This is an increase of 40% on last year’s interim dividend of 7.5 cents per share. It is also in line with its policy of paying out ~50% of profits as dividends.
Codan’s Chief Executive, Donald McGurk, commented: “I am pleased to announce that our strategy to strengthen and invest in our core business through innovation and geographical expansion continues to deliver exceptional results.” “The strong performance was driven primarily by our metal detection business, with significant growth across both gold and recreational markets.”
Although Codan has started the second half strongly, it notes that it is too early to determine if its traditional second-half weighting of sales will occur this year.
In light of this, the Codan Board revealed that it is not in a position to provide full year profit guidance at this point. Instead, it intends to keep shareholders updated as the year progresses.
Management also confirmed that it expects to settle the recently announced $114 million DTC acquisition by end of April 2021. After which, it will commence integrating this new technology business within its Tactical Communications segment.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.