I think this is going to be one of the gnarliest reporting...

I think this is going to be one of the gnarliest reporting seasons over the past, I dunno, maybe ten years.

There are pitfalls aplenty, with sluggish economic conditions constraining top-line performance which, when combined with input cost pressures, suggests plenty of margin pressure.

So, while it is usual to have a half-decent idea what to expect from a NCK result, tomorrow is a bit of concern because of certain uncertainties that will impact the result.

I took at Pre-Tax Profit to remove any distortions from variations in providing for taxation, and then at EBIT in order to get a gauge of operating performance, without possible finance expense distortions.  

And as I tonight briefly run over the inputs to my NCK financial model, I find the Pre-Tax and EBIT numbers could conceivably land within a rather wide range.  

Focusing on FY2024's Pre-Tax Profit, my base case is for a figure of $113m, which would be down ~20% on FY2023's $143.5m, but in half-year terms DH2023 took the worst of the hit, being down 28% on its pcp.  JH2024 is set to come in 11% lower than its pcp, according to the model:

Pre-Tax Profit By Halves ($m), and change on pcp [%]:
DH2022:  86.4 [+79%]
JH2023:   57.1 [-4%]
DH2023:   62.2 [-28%]
JH2024 (f): 51.0 [-11%]

So while $113m Pre-Tax Profit is the base case, I do worry about pressure on the gross margin, due consumer softness, CoGS inflation as well as international freight costs, which have been rising sharply again in recent months. I have the GP Margin coming in at 64.5% for the full-year (DH2023 GP margin was 65.6%, and I think 63.5% in JH2024 is not out of the realms of possibility).

Then there are the imponderable additional CoDB expenses likely to be incurred in the integration, re-branding and refurbishment of the Fabb Furniture business, which was owned for the last 2 months of the year. While many other company managements might seek to spare the bottom-line earnings by capitalising these sorts of expenses, knowing NCK management like I do, the NCK P&L is likely to simply have to wear them on the chin (The market is invariably too lazy to normalise for this kind of thing).

So, there are a number of inputs this time which are more rubbery than usual.

Accordingly, I'm saying Pre-Tax Profit of $113m is best guess, any  number below $110m would be bad news, and anywhere approaching $120m would be an absolute miracle.  

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