G8 Education shares tank after profit forecasts slashed again

Childcare services provider G8 Education has shocked investors with its second profit warning in three months, as it blamed weaker-than-expected occupancy rates at its centres and higher staffing costs for the downgrade.

Underlying earnings before interest and taxes (EBIT) are now expected to come in at between $131 million and $134 million for the financial year, the company said in an investor presentation filed with the ASX on Thursday. That’s down from its forecast of $140 million to $145 million in August and below last year’s result of $136 million.

Investors dumped the stock, sending its share price down 17 per cent to $2.13.

Not enough toddlers have been arriving at G8 Education childcare centres. Credit:Louie Douvis

G8’s occupancy rates – or how full its centres are with children – rose 1.5 per cent in the first half to 71.3 per cent and the company in August said it expected a similar improvement across the full year. But actual occupancy growth reached just about 1 per cent, creating a $7 million revenue shortfall, which would have a “significant flow-on effect to EBIT due to our seasonal earnings,” chief executive officer Gary Carroll said in the presentation.


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