ASX-listed printer Ovato reported significantly lower net cash loss of $4.3 million (down from a loss of $23 million pcp) in its quarterly cash flow report for the three-months ended 31 December 2021. “Ovato continues to be adversely impacted financially and operationally by the ongoing COVID-19 restrictions in Australia and in New Zealand."
Ovato's Warwick Farm site in Sydney
“Following extensive restructuring initiatives, which included the sale of the Marketing Services and Retail Distribution businesses and the closure of the Residential Distribution business last year, the primary focus of Ovato continues to be on driving further cost efficiencies in its core printing operations,” the company told the ASX.
“This has resulted in a positive impact on cash flows from operating activities for the current quarter, with the net cash loss of $4.3M being significantly lower than the prior quarter of $23.2M.”
Cash from operations for the second quarter of FY22 was negative A$4.3M and net cashflow from investing activities was positive A$0.8M. Cash and equivalents at December 31 2021 was $9.3M.
“Ovato continues to be adversely impacted financially and operationally by the ongoing COVID-19 restrictions in Australia and in New Zealand,” it said. “This has had a significant effect on retail activity and supply chain management. The impacts of COVID are also flowing through to our retail customers, where continuity of supply is likely to influence their future advertising decisions.
“Delivery timelines for both paper and ink supplies for Ovato have also been disrupted as well, with significant price increases being incurred for these materials. These disruptions and price increases have had an adverse effect on operating cash flow.
“During the last quarter, Ovato undertook the capital management initiatives of a minimum holding share buyback and a share consolidation. Ovato continues to be grateful for the continued support of its customers and suppliers, and are pleased that major recurring contracts have been renewed.”
In November 2021, Ovato replaced chief financial officer Andrew Stedwell and promoted former GM of Finance Ian Jones to the role, three months after the company posted a net loss of $67 million for 2021.
Ovato shares dipped 12.5% at close of Monday trading, to 18cents per share.