Floods and Covid smash G8 Education’s first quarter result
The first quarter earnings of one of Australia’s biggest childcare groups has been smashed by the flood disasters and the lingering effects of the pandemic.
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Flood disasters in Queensland and NSW since the start of the year, along with lingering effects of the pandemic, have smashed one of Australia’s biggest childcare and early education providers.
G8 Education announced this morning that its first quarter pre-tax earnings had plummeted to just $1m, down from $17m in the same period last year.
The Gold Coast-based group, which was forced to close a number of its centres since January and suffered a drop in occupancy, attributed $6m of the fall to a substantial increase in pick up in gap fee waivers extended to support families.
The lack of additional government subsidies for Covid cost it another $5m, with an additional $2m blamed on employment costs, additional use of agency staffing, sick leave and workforce shortages.
“The combination of rising Omicron cases and the devastating floods made for a very difficult first quarter,” chief executive Gary Carroll said.
“We recognise the need to remain disciplined, robust and resilient as an organisation and believe the measures we are implementing are prudent and will deliver short and long-term benefits to the Company.”
G8 said it remained on track to slash costs between $13m and $15m this calendar year, with the bulk of the savings expected in the second half.
The company also plans to refurbish about 140 of its centres this year as part of a “centre improvement program”.
G8 Education revealed in February that it had generated a net profit of $45.7m in the last calendar year, a significant turnaround from the $189m loss it suffered in 2020.
It was a better-than-expected result for the company, which also announced an on-market share buyback worth about $100m.
At the same time, G8 said that almost $38m had been directed to 18,677 current or former staff who had been underpaid. Settlement remains outstanding for another 7400 workers.
Originally published as Floods and Covid smash G8 Education’s first quarter result
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