It's a week shareholders rather forget as the Codan Limited (ASX: CDA) share price tanked 23% despite announcing a new contract win.
The Codan share price crashed by another 7% this morning to a more than one-year low of $10.24. The loss is on top of the 19% hit yesterday on the contract news and annual general meeting.
While it's often difficult attribute one reason for a share price collapse, Codan's fall from grace is probably linked to its outlook.
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Record profits aren't enough for Codan share price
Investors may have been hoping for a stronger start of the FY22 financial year than what the group is suggesting.
"While parts of our business remain difficult to forecast, we have made an excellent start to the financial year," said Codan's outgoing chief executive Donald McGurk.
"Our existing businesses are tracking in line with last year's record first half profitability, while DTC and Zetron are transitioning and integrating well into the Codan group and are tracking in line with plan.
McGurk is confident on delivering a new record first half result, but the market may have been hoping for a more bullish statement than "tracking in line".
Codan share price dodges COVID bullet
At least the global pandemic didn't seem to be affecting the Codan share price as much. Several ASX companies, such as the Audinate Group Ltd (ASX: AD8) share price, have been hit hard by shortages of electronic components.
Codan dodged that bullet by ordering ample inventory of Minelab equipment. Shut borders have also bolstered interest in outdoor recreational activity and that has helped sales of Minelab metal detectors. These are used by recreational gold explorers.
Contract win and growth outlook
The group is aiming to become a full-solution communications equipment provider and acquired video equipment business DTC Communications Inc.
The new contract worth $37.6 million that was announced yesterday relate to orders for DTC products – not that it mattered to the Codan share price.
The group's covert surveillance business is also experiencing a resurgence in demand. It was recently awarded several contracts as governments increase spending on homeland security.
Codan expects to announce McGurk's replacement in November and reaffirmed its long-term growth targets.
New CEO to be announced next month
"I can confirm that our detailed 3-year plan remains in place and that with the assistance of our high quality, committed executive team, no momentum will be lost as we work through the change of leadership," said Codan's chairman David Simmons.
"We fully expect that our new Managing Director will pick this plan up and own it. No big business or organisational review, just a simple plan to get on with it."
Judging by the Codan share price, investors are yet to be reassured.
