AFL released FY 2021 results today and the market didn't like them, a massive reversal of last half's profitability and a big loss for the full year.
I have had a bit of a chat to a couple of fellow investors and I think they are right in pointing out that while the results are worse than the company had suggested from guidance, there are some mitigating factors.
The two acquisitions in the half have impacted negatively on earnings - the costs have all flowed through but any revenue has been slow to come in, there were some staffing issues as well at the start of H2 that didnt help with the expenses and the previous 2 quarters cash flow had been particularly strong and the cycle of working capital caught up this time and detracted from the operating cash flow.
I think the promotional management style hasn't helped, they failed to flag the likely downturn and then chose to ignore it in the AR & investor presentation, instead focussing on bullshit earnings. It probably would have been prudent to outline to shareholders why EBIT, NPAT & FCF were so negatively impacted and why in the particular circumstances they weren't necessarily a good indicator of the financial health of the business.
I was considering getting out based on the annual report, but I have decided to hang in there and see if they can deliver some earning power from the acquisitions and some organic growth to improve the financials.
