The Codan Limited (ASX: CDA) share price has taken a tumble on Thursday.
In afternoon trade the electronic products company's shares are down 5.5% to $8.01.
Why is the Codan share price tumbling lower today?
Investors have been selling Codan's shares following the release of its half year results this morning.
Although the company delivered strong top and bottom line growth, its guidance for the second half appears to have underwhelmed bullish investors.
During the six months ended December 31, Codan delivered revenue of $171 million and EBITDA of $54 million. This was a 33% and 42% increase, respectively on the prior corresponding period.
On the bottom line, Codan reported a record half year net profit after tax of $30.4 million or earnings per share of 16.8 cents. This was up 37% on the prior corresponding period.
This strong form allowed the Codan board to declare an interim fully franked dividend of 7.5 cents per share. Which was almost double the 4 cents per share it paid this time last year.
Key drivers of this growth were the sales of Communications products and Metal detection products. Communications products sales grew 64.6% and Metal detection products sales were up 22% during the half.
Codan's Chief Executive, Donald McGurk, explained, "The results for the first half have been outstanding across the business, with both Codan Communications and Minelab achieving record first-half results. The strong performance was driven by the continued strength of gold detector sales in Africa across multiple products, coupled with several major contracts delivered in the Communications business. We are pleased that our strategy to diversify our revenues and broaden our addressable markets is continuing to deliver results."
Outlook.
Whilst the release of the Vanquish metal detector has positioned its Metal detection business well for the second half, things are not quite as positive for the Communications business.
Management warned that the Communications business delivered ~$21 million of large contracts in the first half. These may not be repeated in the second half.
And while it does have a strong sales-opportunities pipeline, the long lead times associated with contract approvals may result in lower Communications sales half on half.
No profit guidance will be given until later in the financial year.
