Australian investors have enjoyed a strong start to today's session, but the same cannot be said for shareholders of McPherson's Ltd (ASX: MCP) which has plunged almost 22% to trade at 73 cents.
McPherson's, which is a consumer products company, has become the latest company to contribute to the "confession season" after companies such as APA Group (ASX: APA), Metcash Limited (ASX: MTS) and Qube Holdings Ltd (ASX: QUB) downgraded their earnings guidance yesterday, as highlighted by my colleague Brendon Lau.
In a market-sensitive announcement made this morning, McPherson's said that it now expects underlying pre-tax profit for the year to be between 20% and 25% below the result achieved in the 2014 financial year (FY14), down from previous guidance of 5% to 10% growth. That would suggest a pre-tax profit as low as $15.5 million, down from $20.7 million in FY14.
The company said that the main reasons behind this result are delays in realising the benefits from the company's substantial transformation program, together with heavier promotional activity and weaker consumer confidence in certain areas than it had previously anticipated.
Commenting on the announcement, the company's Managing Director, Paul Maguire, said "We have restructured many aspects of the company to improve efficiency and to create a more resilient business and a strong platform for earnings growth."
He added that "We remain confident that our transformation strategy is sound, and the improvements we have made, and continue to make, will have a significant positive impact on earnings in future years."
Now trading at 73 cents, the stock has nearly halved in value since September last year and now boasts a market capitalisation of roughly $75 million, according to Google Finance.
