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Codan Falls Despite Record Profit

Metal detector focused player Codan was expected to rocket today after announcing record profit, however, this was not the case.

This morning Codan announced their full year results, the highlights of which include:

  • Group sales increased 16% year on year to $506.1 million

  • 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%

Global supply chain issues and long-lead times of components have led to poor conditions in North Eastern Africa for the Minelab business.

On a more positive note, the communications portfolio, Tactical Communications and Zetron increased sales by 152% to $241.7 million in FY 2022. Metal detection sales unfortunately 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 after COVID headwinds.

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.

Codan CEO Alf Ianniello stated:

“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.”

Looking forward, the company plans to focus on building a more predictable and diversified sales base to boost long-term shareholder value.

Tactical communications are targeting military programs, given the increased instability globally. Communications business has strong orders in the pipe of $149 million and a growing pipeline of quality opportunities.

And finally, Minelab 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.

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