Currency headwinds are an issue for cash earnings and statutory EPS. The FY20 ave USD/AUD rate was around .67. Current rate is circa .78 (although average for the half would be less than that i think) and they say every c movement represents 1.9 million AUD difference in rev (this is rendered after their hedging strategy so it would be more without hedging). See slide 16 of the FY20 preso for source data.
That issue is further compounded if the trend of like for like revenue decline seen in the FY20 results continues (see slide 12 FY20 results preso - it is off 3% yoy). In other words, there does not seem to be organic revenue growth if you adjust out currency movement and acquisitions.
Not great on that assessment.
This is a good business but it does not seem to be heading in the right direction. If revenue continues to decline on a like for like basis then EPS growth can only come from cost outs and accretive acquisitions. Cost outs must be reaching its epoch given they say they work on industry leading margins and a falling PE reduces accretive gains even assuming there is something else to buy.
I've held in the past and am looking at it again.
Am I missing something?
IPH Price at posting:
$6.51 Sentiment: None Disclosure: Not Held
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