Here’s why the G8 Education share price cratered today


The G8 Education Ltd (ASX: GEM) share price tumbled 18% to $2.13 today after the childcare business warned investors that occupancy growth for the year will be less than previously forecast at 1%.

The group blamed the lower-than-expected occupancy growth rate on the fact it’s cycling off a strong prior comparative period boosted by the impact of the improving Child Care Subsidy allowance. It also admitted that overall market supply was greater than it previously expected. 

The group also flagged that wage costs were higher than expected, with $10 million in ‘one off’ costs to be taken related to restructuring, consultant fees, and other staff costs. 

The lower occupancy has translated into a revenue shortfall and downgrade to the forecast for calendar year 2019’s EBIT. It’s now expected to land between $131 million to $134 million.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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