I have simply - like others - been trying to make sense of the figures and the narrative. There are plenty of others questioning the continued references to the replacement of unprofitable business with higher margin business. This time we also got told that there had been a slow down in the market (normal for particular times of the year) and that we were positioned well for growth.
The figures have made plenty of others look hard at what appears to be slower growth. None of the rapid trajectory of last year
So it seeemed to me to be reasonable to ask how much of the business announced last year needed to be replaced and at the same time to ask how much of the business opportunities that were announced last year have vanished or didn't really exist
Plenty of others have queried what has happened to market sectors other than textiles/bedding and highlightedthe role of Alexicool.
The problem is we don't know the answers to any of these questions. As a result we can't tell how much of the revenue is from new business and how much is recurrent lower margin business from last year and how much of that is booked to discontinue. We also don't really know how far off we are from securing business in other sectors - or even if that is looking possible.
What I had been considering was how easy it would be for a business to deal with a situation where they had to replace the $11m from cy2016 and whether they could really afford to say "we are replacing almost all of last year's business because it wasn't worth keeping". I'm not saying that is the case, I am speculating what impact that would have. The answer is obvious I think - you probably can't easily do it. And in any case it probably isn't that simple.
So, until the company is back in a more obvious growth mode they are hampered.
P
AJX Price at posting:
33.5¢ Sentiment: Buy Disclosure: Held
(20min delay)