Sealink (ASX:SLK) share price falls 6% despite $37.8 million profit

Despite Sealink releasing mostly positive results, its share price is sliding.

| More on:
a bus driver looks out the window with a serious look on his face while sitting at the wheel of his vehicle.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Sealink Travel Group Ltd (ASX: SLK) share price is sliding today following the release of the company's financial year 2021 (FY21) results.

Right now, the Sealink share price is 5.33% lower than its previous close. The company's shares are swapping hands for $9.49 apiece.

Here's how the tourism and transport company performed in FY21:

Sealink received $11.9 million from JobKeeper in FY21. It also got similar support from employee-focused schemes in Singapore and London.

Approximately 90% of Sealink's FY21 revenue came from contracts with governments or blue-chip corporate counterparts.

The company ended the period with $103.4 million in cash and $19.4 million of borrowings.

What happened in FY21 for Sealink?

FY21 was a big one for Sealink and its share price. The company's contract portfolio expanded in all 3 operating divisions.

It retained its Singapore Bulim bus contract and was awarded the contract for SembawangYishun.

It also commenced the up to 15-year contract to operate Brisbane's CityCat, CityHopper, and Cross River ferry network.

Sealink renewed 3 significant bus contracts in Adelaide and added Adelaide's Outer North bus services contract. It also commenced the operation of the newly-franchised Adelaide tram contract as part of a joint venture.

Additionally, the company renewed key strategic marine contracts in Townsville and Darwin, and also acquired Western Australia's Go West Tours. Sealink believes Go West Tours may allow it to realise opportunities in the mining and resources sector.

Sealink states its zero emissions and demand-responsive transport through battery electric and hydrogen-powered buses is market-leading. A two-year electric bus pilot in a single New South Wales region was completed in June 2021. The pilot resulted in the NSW Government purchasing another 10 electric busses.

FY21 wasn't all good though. There's plenty of bad news that might be affecting the Sealink share price today.

COVID-19 impacts on the domestic and interstate travel markets challenged Sealink's marine and tourism operations in FY21. However, domestic demand was strong when COVID-19 restrictions weren't in place.

Government contracted bus services weren't badly affected by COVID-19. Though, revenue from chartering and advertising fell. The company said extra bus services to accommodate social distancing offset some of the losses.

Sealink's London segment faced dire challenges over FY21. The company retained 3 Transport for London routes and acquired 1 from a competitor. However, it lost 4 of its London routes.

What did management say?

Sealink's CEO Clint Feuerherdt commented on the results driving the company's share price lower today:

SeaLink has demonstrated the resilience of its operations and quality of its contracted earnings base in the face of an unprecedented global disruption. We have delivered on our objectives in a safe and responsible manner whilst positioning the Group to capitalise on opportunities as they present.

Whilst the Marine & Tourism division is exposed to the turmoil that the COVID-19 pandemic inflicts, SeaLink is well positioned to capture the heightened level of domestic travel demand, providing marine transport, holiday and general tourism product to very unique island destinations around the country.

I am very pleased with the way we anticipated, navigated, and repositioned to finish this year with a strong balance sheet that supports our growth strategy.

What's next for Sealink?

Here's what might drive the Sealink share price in FY22:

Sealink has placed Australia's first order for 2 hydrogen fuel cell buses.

It has also placed an order for 31 battery electric buses, which will bring Sydney's electric bus fleet to 55 in FY22.

Sealink is continuing to explore the possibility of installing solar systems on 6 Adelaide bus depots, as well as partnering with the South Australian Government to deploy hydrogen fuel cell buses in Adelaide.

The company is currently working at Joondalup Bus Depot to bring electric busses to Perth.

Finally, Sealink is continuing to lobby for competitive tendering for public bus transport in Queensland, Tasmania and the Australian Capital Territory. It is also looking to potentially expand its public transport footprint into the USA.

Sealink share price snapshot

Despite today's fall, the Sealink share price has gained 42% year to date. It is also 111% higher than it was this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Earnings Results

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Earnings Results

Westpac shares on watch amid $6.99b profit and new buyback

Has the big four bank delivered the goods for investors this year? Let's find out.

Read more »

Woman inspecting packages.
Earnings Results

This top 50 ASX stock is diving 5% despite a strong outlook

Investors were looking for more.

Read more »

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Earnings Results

Macquarie share price sinks despite $1.6b half year profit and new buyback

How did this investment bank perform during the first half? Let's find out.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
Earnings Results

Why the BrainChip share price is in the spotlight this week

Today's reaction is in stark contrast to the day of the release.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

2 All Ords ASX healthcare shares making BIG moves on quarterly updates

These two ASX healthcare companies are seeing heavy trading on Thursday.

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
Resources Shares

Lake Resources share price sinks on quarterly cash flow news

Let's take a look at the highlights of the company's Q3 update.

Read more »

Lithium ion batteries
Earnings Results

Needs a recharge: Novonix share price sees red after Q3 earnings

Investors were likely expecting a tad more.

Read more »

chip and tech stocks represented by two computer chips side by side
AI Stocks

Up 237% in 2024, why is the Appen share price racing higher again today?

Investors are bidding up Appen shares again today. But why?

Read more »