Hong Kong-listed power tools maker Techtronic Industries Co.’s 2022 profit missed estimates, a week after a short-seller report wiped about $4 billion off its market value.
(Bloomberg) — Hong Kong-listed power tools maker Techtronic Industries Co.’s 2022 profit missed estimates, a week after a short-seller report wiped about $4 billion off its market value.
Net income totaled $1.08 billion last year, a 2% drop from 2021, while revenue edged up 0.4% to $13.25 billion, according to a Wednesday filing from the company, which was co-founded by German engineer Horst Julius Pudwill in 1990. Higher interest expenses led to the profit drop, Techtronic said.
Analysts tracked by Bloomberg had forecast net income of $1.15 billion on average and $13.78 billion revenue.
Techtronic shares tumbled 19% on Feb. 23, their biggest slump in over 14 years, after Jeoshaphat Research questioned the company’s accounting methods. Techtronic said last week it “vigorously denies all the allegations,” calling the report “defamatory, biased, selective, inaccurate and incomplete.” It echoed those comments in an 11-page filing Wednesday, when it also said it may take legal action.
Chief Executive Officer Joseph Galli Jr on Thursday called the report’s claims “baseless” and said that Techtronic was “fully compliant with all accounting principles.”
“Independent auditors have signed off on our results this year and every other year,” he told CNBC in an interview. “We’ve never had a problem with our independent auditors.”
Intangible assets amounted to $1.12 billion in 2022, Techtronic said, a 32% increase from the previous year and higher than the average estimate from analysts.
The shares have risen 7.1% since Feb. 23’s close, but Techtronic’s market value is still almost $3 billion lower than before the short-seller report.
Techtronic said Wednesday it is “well positioned to outperform the market in 2023,” helped in part by prudent management of production and a stream of new products. “We remain highly confident in our ability to continue driving gross margin improvement,” it said in the filing.
Among analysts tracked by Bloomberg, 18 out of 19 have buy ratings on the company and the other recommends to hold.
“We believe we can grow the company by mid-single digits this year, despite the economic environment we see around the world,” Galli said during a webcast after the results Wednesday.
–With assistance from Filipe Pacheco, Ryan Lovdahl and Karen Leigh.
(Adds CEO comments from fifth paragraph. A previous version of this story corrected the currency in third paragraph.)
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