The G8 Education Ltd (ASX: GEM) share price has fallen in early trade. The soft start to the week comes despite the childhood education group reporting a surge in profits after a COVID-affected 2020.
At the time of writing, the G8 Education share price is down 2.86% trading at $1.02.
G8 Education share price slumps despite profit surge
Shares in the Aussie early childhood education provider are sliding after the company's half-year results release. Some of the key takeaways from 1H 2021 include:
- Revenue up 36.8% on the prior corresponding period (pcp) to $421.5 million
- Statutory net profit after tax (NPAT) of $25.1 million compared to a $244.1 million net loss in 1H 2020
- Operating earnings before interest, tax, depreciation and amortisation (EBITDA) up 15.2% to $102.4 million
- Basic earnings per share of 6.5 cents, compared to a 62.5 cents per share loss in 1H 2020
- No interim dividend
Investors are likely to keep an eye on the G8 Education share price today after the company announced intentions to pay a full-year dividend at year-end.
What happened in first-half FY21 for G8 Education?
COVID-19 restrictions were disruptive to operations throughout the half. Core occupancy levels recovered from 65.1% in 1H 2020 (on a restated basis) to 68.0% in the most recent half-year period.
The group's 191 regional centres performed strongly with occupancy levels up 4.4% than the COVID-19 impacted 1H 2020 result.
G8 reported a strong balance sheet (with a net cash position) to help ride out the COVID-19 storm. Management has also signalled its intention to pay a full-year dividend for the period ended 31 December 2021.
The G8 Education share price fell 16.7% from the start of the year through to 30 June.
What did management say?
G8 CEO and managing director Gary Caroll had this to say about the result:
During the half, our operating performance continued to recover, with occupancy in the first half narrowing the gap on CY19, driven by our strategic change programs and a particularly strong performance from our regional centres.
Costs were well-managed, and we remain concentrated on maintaining our balance sheet strength and flexibility.
After an encouraging first half, since June, we have started to see some impact of COVID-19 lockdowns on occupancy in the eastern states.
We have the right settings and systems in place, and are well-capitalised to weather this period and emerge in a strong position.
What's next for G8 Education and its share price?
COVID-19 restrictions across the country continue to impact G8's operations in FY22.
The G8 Education share price is slipping today as management sets its sights on an end-of-year dividend.
Shares in the Aussie early childhood education provider are down 14% this year and underperforming the S&P/ASX 200 Index (ASX: XJO).
