Asaleo Share Price Plummets Over 33% on Downgraded Earnings

Asaleo Care Limited’s [ASX:AHY] share price crashed today after the release of their less than expected full-year results.

The company’s shares dropped 33.72% in trading today — currently sitting at 86.5 cents.

The personal hygiene producer is most commonly known for its leading brands including Sorbent tissues, Libra personal care and Handee Ultra paper towels.

Why did Asaleo slash their full-year earnings?

Asaleo has lowered its full-year guidance by $33–34 million. The updated guidance is between $80–85 million, down from the previous $113–119 million.

Asaleo has said that the profit downgrade has stemmed from a number of factors, including higher pulp and electricity costs of around $10 million, along with lower sales in both its consumer tissue and baby care business.

In addition, increased trade spending to support market share as a result of continued heavy discounting by competitors, and ongoing investments in product quality for the long term have also contributed to the downgrade.

Asaleo Care’s interim CEO, Sid Takla said that despite the minor set-back the business is in a strong and sustainable position.

Whilst it is disappointing to announce reduced results and outlook for the full year, we have made tough decisions for the long-term benefit of the company. We believe that implementation of initiatives from the strategic review will put the Company in a strong and sustainable position.

Will this downgrade have long-term effects on Asaleo?

Asaleo seems confident that this is a minor set-back that will have no long-term effect on the business.

Mr Takla said that the upcoming focus for Asaleo will be on brand and product development.

We will also continue to mitigate cost imposts to strengthen our medium to long term results and returns, and are confident that a renewed focus on brand and product development initiatives will enhance our value proposition to consumers.

Dannielle Rawlings

For Markets & Money

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