The Codan Ltd (ASX: CDA) share price is heading south after the company released positive full-year results today.
At the time of writing, the metal detector-focused technology company's shares are down 10.32% trading at $7.91.
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Record sales, profit and dividend
Codan delivered its FY 2022 results for the 12 months ended 30 June 2022. Here are some of the key financial highlights:
- Group sales increased 16% year on year to $506.1 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) of $162 million, up 2%
- Record underlying net profit after tax (NPAT) of $100.5 million, up 3%
- Underlying earnings per share (EPS) of 55.6 cents, up 3%
- Final dividend of 15 cents per share, fully franked, bringing the full year dividend to 28 cents per share, up 4%
What happened in FY 2022?
Codan reported an outstanding financial performance despite operating under very difficult circumstances.
The group was impacted by global chain shortages and long-lead times of components. This created challenging business conditions in North Eastern Africa for the Minelab business.
Metal detection sales reduced by 20% over the prior corresponding period to $262.3 million in FY 2022. However, it was Minelab's second-best year on record as Codan noticed a return to a normalised demand profile post COVID-19.
Moving over to the communications portfolio, Tactical Communications and Zetron increased sales by 152% to $241.7 million in FY 2022.
Notably, Tactical Communications received the largest order in Codan's history for the supply of software-defined mesh radios. The first order was for roughly $38 million of which $13 million was delivered in FY 2022.
What did management say?
Codan chief executive Alf Ianniello commented on the results, saying:
Despite a challenging operating environment, Codan delivered another record profit year. We have been able to successfully execute on our strategy and as a result, the business has grown and diversified its sales base. The business today has much stronger foundations and with a well-balanced portfolio of sales, there is more stability in the business.
It is very pleasing to see DTC and Zetron both delivering results exceeding our year one expectations. The DTC and Zetron acquisition and integration processes have been a success and we now have a framework that is proven and repeatable.
What's the outlook for FY 2023?
Looking ahead to the new financial year, Codan stated that general business conditions remained challenging.
Nonetheless, it plans to focus on building a more predictable and diversified sales base to boost long-term shareholder value.
The communications business has a strong order book of $149 million and a growing pipeline of quality opportunities. It is expected to achieve strong growth in FY 2023.
In particular, tactical communications is targeting military programs, given the increased instability in the world.
In regards to Minelab, Codan noted that sales in the first half of FY 2023 may not reach the level achieved in prior year. However, with new product releases it remains confident of a stronger second half.
Codan share price snapshot
The Codan share price has fallen 17% in 2022 but is heavily down by 55% over the past 12 months.
For context, the S&P/ASX All Technology Index (ASX: XTX) sector is down 25% for the current calendar year.
Codan presides a market capitalisation of approximately $1.43 billion.
