Lowered the Guidance: Leading personal care and hygiene company, Asaleo Care Ltd (ASX: AHY) witnessed a stock price plunge of 5% on December 12, 2017 as the group announced for soft trading update and a reduction in its full year guidance for the financial year ending 31 December 2017. The group has highlighted the reduction in guidance at the back of sales under performance in the Feminine Care category that has been hit by extensive competitive pricing, which in turn affected sales volumes. The group is now working on price flexibility to have the category return to growth.
 

Revised Guidance to December 2017 (Source: Company Reports)
 
On the other hand, the Incontinence and Tissue segments continue to trade with solid profit growth during 11 months to November 2017 irrespective of cost imposts associated with energy, pulp and currency.The group has also resolved the quality issues associated with the commissioning of the new diaper line in NZ that delayed the recent Baby product upgrade and relaunch. AHY is set to manufacture a higher quality diaper product. The free cash flow is also now slated to $70 - $75m from $85-$95m.

The new guidance sets FY17 results to fall below FY16, and AHY will provide a detailed commentary with 2018 outlook in February 2018. In last six months, AHY stock moved up 10.4% (as at December 11, 2017); and given the recent shortcomings, we put a “Hold” on the stock at the current price of $1.51.

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