Advance Nanotek Ltd (ASX: ANO) shares tumbled lower today following the dispersion manufacturing company releasing its interim financial report for the half-year ended 31 December 2020. By the market's close, the Advance Nanotek share price had fallen 12.37% to $3.40.
In short, the results were a significant downgrade from the prior year. Let's take a look at how the numbers stacked up and management comments regarding the slip in performance.
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What drove the Advance Nanotek share price lower?
The Advance Nanotek share price was heavily weighed down today after the release of the company's results. Advance Nanotek reported that its revenue for the half-year ended fell 69.63% to $3.433 million. This result also flowed down to the company's profit, resulting in a 93.32% decrease to $225,000 in profit.
You might ask what could lead to such a significant impact on results. The answer provided in the report is the ongoing travel restrictions and lockdowns caused by COVID-19. Given the company's aluminium oxide and zinc oxide dispersions are made predominantly for use in sunscreens, demand for the product has fallen off a cliff.
Consequently, earnings per share (EPS) has declined from the previous period's 38 cents to just 5.71 cents this half.
In the chair's letter accompanying the half-year accounts report, there was some good news outlined, despite the poor result. This included the following:
- Remains commercially debt-free.
- Successful installation of a new dispersion line capable of producing the equivalent of 250 million 100-gram tubes annually.
- Successful installation of equipment to increase zinc oxide production to 5,000 tonnes per annum.
- New product development continued.
The new products developed by Advance Nanotek include vegan and/or organic-based offerings, such as an all-natural insect repellent sunscreen. The company is awaiting Therapeutic Goods Administration (TGA) approval before scaling production.
The board's forward view
Despite the disappointing result, the Advance Nanotek board emphasised that the achievements made during the half-year are likely to produce positive results for many years to come. Meanwhile, the board further advised that the impacts on sunscreen sales due to COVID-19 will hopefully be resolved before 2023.
