The InvoCare Limited (ASX: IVC) share price has gone up 8% after releasing its FY21 half-year result.
InvoCare’s FY21 half-year result
Invocare reported that its revenue increased by 13% to $260.9 million.
The company said that in Australia, operating revenue has grown in all markets with a 6.6% increase in operating revenue, driven by a 6.7% increase in funeral prices, while volumes were in line with the prior corresponding period.
In New Zealand, there was a 5.8% increase in operating revenue to $26.3 million. Singapore revenue, in local currency terms, increased by 3.4% to S$9.5 million.
The funeral operator said that total operating EBITDA (EBITDA explained) grew by 31% to $63.6 million. Management pointed out there was a return to positive operating leverage. Operating EBIT grew 46% to $39.4 million.
The operating profit / earnings per share (EPS) went up 57% to 14.4 cents.
Dividend
InvoCare’s board decided to pay an interim dividend of 9.5 cents per share, which was a dividend payout ratio of 66%. This was an increase of 72.7% compared to a year ago.
Outlook for InvoCare and the share price
InvoCare warned that the Delta variant spread in Australia is expected to lead to a softening of the funeral services market in the second half of 2021. So management couldn’t provide guidance.
But, management are confident about the long-term potential of the business, with future growth supported by population and ageing trends in its operating markets.
InvoCare said that it will continue to leverage its national footprint in pet cremations with national supply agreements with key veterinary groups.
The company is also doing a number of initiatives to strengthen its position as it aims to lead the industry when it comes to sustainability, innovation and community engagement.
Management said that this FY21 first half result was a sign of the strength of the business when conditions permitted.
InvoCare is an interesting business. As the saying goes, there are only two things certain in life – death and taxes. The company is expected to benefit from the ageing demographics.
But it’s not exactly cheap at 35 times the estimated earnings for the 2022 financial year, according to CommSec numbers.
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