Vertically integrated wholesale floral company Lynch Group Holdings [ASX:LGL] has today provided a trading update for the past full year to 2 July 2023. The company said it will be upgrading its earnings for the full year thanks to rising performance.
Lynch has upped its earnings guidance from $36–40 million to the new and improved expectation of $42–43 million.
This decision was based on the back of its latest trade results, with revenue now expected to increase by 5% on strong sales and return of stores.
LGL has dropped by nearly 3% in share price and was trading at around $1.89 per share at the time of writing.
The flower seller has gone up nearly 15% in the last month and 26% in the year so far:
Source: tradingview.com
Lynch Group ups guidance expectations on stronger sales
Wholesale flower seller Lynch Group has revealed a new perspective on its earnings for the coming year by unveiling a positive trading update for its investors today.
The group now says it expects revenue growth for FY23, chasing a 5% increase, including an additional week in the first half of FY23.
Lynch Group has now seen fit to upgrade its full-year earnings guidance to be in the range of $42–43 million, raised from the previous guidance of $36–40 million.
The company said this was underpinned by particularly strong performance in sales or return stores. LGL also said that EBITDA margins have been demonstrating a steady improvement across the second half.
The cost of international freight has been determined to be moderating since the calendar year of 2022, with some airline capacity returning rates for key import routes also improving trade conditions.
Lynch also believes financial and operational impacts relating to a recent major customer system shake-up have helped reduce the negative impacts facing many industries in the current climate.
With conditions and the availability of labour improving over the current half, the use of overtime outside of high-volume events — like Mother’s Day — has been less imperative, even as inflation in labour rates has been trending on par with the broader economy.
LGL said there was a sustained rebound in market demand in China (which came with the country’s official reopening in January), ultimately improving pricing in the second half and keeping product event windows strong.
The group also acknowledged an increase in farm production volumes, which have lined up well with internal targets from year expansion works.
What is the outlook for Lynch?
With improvements to the environment and the group’s business overall, Lynch provided its outlook for the full year, with the expectation of group EBITDA being in the range of $42–43 million.
The second half EBITDA for Australia is expected to be finished within the group’s February guidance range of between $11–13 million.
In China, EBITDA is anticipated to exceed the high end of the February guidance range, which is set between $12–14 million.
Dividends are also expected to resume in the second half of the year.
Full FY23 results are expected towards the end of August.
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