ASX-listed Ovato said decreasing volumes as a result of Covid-19 continue to impact its heatset catalogue printing and residential distribution businesses. “Normalising of volumes post COVID-19 may now not occur until the first half of FY22, resulting in FY21 revenue being less than previously expected."
“Pleasingly, sales in books, packaging, retail distribution and marketing services have continued to perform solidly and as expected in the quarter,” Ovato told the ASX in an update for the 3-months ended 31 March 2021,.
“During the quarter Ovato successfully completed the remaining steps of its restructure through the schemes of arrangement which were approved in December. Management will continue to execute ‘fit for market’ strategic initiatives and invest in new technology platforms that will enhance the core commercial print operations. The Board continues to review the appropriate capital structure of the Company with its advisers.
“Overall, the debt profile and balance sheet of Ovato was significantly enhanced by the restructuring activities undertaken late last year.
“Decreasing volumes as a result of Covid-19 continue to impact heatset catalogue printing and residential distribution, and it is expected that the normalising of volumes post COVID-19 may now not occur until the first half of FY22 resulting in FY21 revenue being less than previously expected. Tight cost control will help mitigate the impact of this reduced revenue on the underlying trading results of the Group for the last quarter of FY21.
“The cashflow from operating activities…was negatively impacted by a number of significant non-recurring outflows amounting to $7m arising from the successful implementation of the restructuring initiatives undertaken during the December quarter. Cashflows were also impacted by a $6m negative working capital movement resulting from the timing of payments in the Retail Distribution business.
“Operating cash flows were also negatively impacted by the ongoing impact of COVID-19 on our core customer base and delays in returning to previous trading terms with a number of suppliers.”