Ann: Trading Update, page-10

I understand the comparison to the previous period needs to be considered in relation to JK and the potentially one-off foreign currency loss. Also the margin compression from the lower-margin mix of sales is understandable but a couple of points worth watching:

1) In the FY21 December half the foreign exchange loss was due to the rising AUD but in FY22 the AUD is depreciating against USD and has been flat against GBP and BRL so I wonder how much value it is in trying to offset foreign currency in the FY21 December half numbers to try and get a comparable underlying NPAT value.

But even more than all the above points and maybe more importantly 2) is that they have been unable to pass on 7% of the logistics costs. Hopefully this is just a timing/one-off issue or at least a short-lived occurrence but if it points to a longer issue with their pricing power it might be worth adjusting expectations about SDI's overall strength and given their size in the past they seem to have been able to improve margins but if this is not possible in general moving forward and margin compression continues then this is bad news indeed especially given their small size.