AAP Finance

G8 Education’s FY profit falls 13%

By AAP Newswire

Childcare provider G8 Education has cut its final dividend on a 13 per cent slump in full-year profit, also warning that coronavirus fears and bushfires have added to instability in the market.

G8, which has brands including Community Kids, Early Learning Services and Great Beginnings, on Monday reported a profit of $62.5 million for the year to December 31, factoring a hit from new leasing standards.

The business has 492 centres across Australia and Singapore.

Revenue for the year rose 7.2 per cent to $920.1 million as like-for-like occupancy growth of 1.1 per cent narrowly beat the downwardly revised 1.0 per cent guidance offered in November.

Underlying earnings slipped 2.8 per cent to $132.5 million, also in line with the guidance that was amid a glut in the childcare market.

The company will pay a fully franked final dividend of 6.0 cents per share, down from 8.0 cents a year ago.

G8 shares closed 5.21 per cent lower at $1.73, just above the six-year low of $1.72 it hit during the session.

Chief executive Gary Carroll said the group made solid progress amid challenging industry conditions.

"While G8's network has been impacted by supply in recent years, the rate of growth in supply impacting G8 centres has reduced significantly," he said.

However, there has been significant instability in the market to date in 2020 due to events such as bushfires and the coronavirus.

"This has flowed through to the group's occupancy with year-to-date like-for-like occupancy slightly behind prior year," the company told the ASX.

"Given the recent and continuing market volatility, it is too early to form a clear view on the Group's underlying occupancy performance."

The company says it will manage any instability with "cost management".

G8 closed 16 centres upon lease expiry last year and sold 25 in Western Australia.

The business bought 15 centres during the period.