Cost of living expenses may be rising through the roof but that hasn’t stopped people spending to look good with dental products company Southern Dental (ASX: SDI) announcing they are expecting a 16% increase on sales for FY22 to $95 million.
Southern Dental produces a range of dental products that are manufactured in Melbourne that are shipped all over the world to healthcare product distributors and dental businesses. These products are then applied both in routine dental care or cosmetics, the latter of which is hugely lucrative for Southern Dental particularly in South America where a million dollar smile is often the epitome of success. Just check out some of their leading influencers…
For the year ending 31 June 2022, Southern Dental has forecast sales of $95 million which will represent an 16% increase on the $81.6m reported in FY21.
While sales are up, the international distribution network that Southern Dental services has higher freight costs, as have most manufacturers that ship internationally amid the supply chain crunch that has lingered throughout the pandemic.
“We are thrilled to announce that FY22 will be a record sales year for SDI, with an estimated $95 million of sales for the year. The strong growth momentum we achieved in the 1H22 continued throughout the 2H22, with all product areas growing strongly across all regions,” said Southern Dental CEO, Samantha Cheetham.
“Freight costs remain an ongoing headwind for the group, as with many other companies, impacting the bottom line with an expected net profit of $7.0-$7.5 million for FY22.
“Despite this, we remain committed to our strategy of prioritising customer service and, whilst we have incurred additional freight costs to ensure supply, we are confident that our strategy has led to increased market share underpinning this record sales result, and best positions SDI for future growth.”
The expected NPAT would be a year-on-year decrease of 16% at the lower end or 22% at the higher end after reporting $8.9m in FY21 which delivered shareholders an interim dividend of $0.017 per share, followed by a final dividend of $0.015.
The increase in sales revenue coincides with Southern Dental’s restructure of its Brazilian operations which became fully operational in January 2022.
With more global brands increasing their advertising budgets around social media marketing and influencer marketing, this trend is flowing down to the cosmetics industry where Southern Dental is investing in development of its Aesthetics and Whitening products.
Delivering from this R&D, South Dental expects to release 1-2 new products each year as well as its Amalgam replacement product which it anticipates launching in 2023.
In recent years, use of Amalgam for dental fillings has drawn the ire of regulators as research shows its high levels of mercury vapour have potentially long-term effects on brain and kidney health which has prompted the dental industry away from use of the compound.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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