Navitas loses government contracts, shares down 16%
Navitas, Ltd. (ASX: NVT), Australia’s leading private educator, announced on Monday that it has been informed by the Commonwealth Department of Education regarding the possibility of losing government contracts. Navitas’ shares dipped to as low as 16 percent in intraday trade on Monday following the announcement.
On its company disclosure to the Australian Stock Exchange (ASX), Navitas stated that it may not be able to be included as one of the providers of the Adult Migrant English Program (AMEP) after June 30. Navitas, however, noted that it is yet to officially accept the proposed reduction in contract until a formal contract has been presented to the company and the Australian government.
Stocks dipped
Navitas’ shares plunged as much as 16 percent after the announcement to AU$4.15, their biggest intraday fall in more than 16 months. On Tuesday, Navitas still closed in the negative territory at AU$ 4.06 per share, down 3.7 percent from Monday’s close. “It probably does justify the rather large fall that they're taking,” Nasdaq reported Evan Lucas, a strategist at IG Markets, saying.
“The proposed reduction in contract regions is disappointing news as Navitas has been delivering this important program to a high standard since 1998,” chief executive Rod Jones said. He added that Navitas, however, will continue to focus on providing high-quality outcomes and smooth transitions.
Reduced income
Navitas also stated that the company’s Professional and English Program division’s earnings will fall by between $12 million and $14 million in 2018 and beyond. This was just an estimate as the final assessment shall be available on April 4, the company’s investor day.
The Professional and English Program division booked a 3 per cent fall in earnings to $11.4 million for the six months to December 31. This is expected to post earnings of about $22.8 million for the year ending June 30.
Trump’s immigration ban
Earlier in February, Navitas issued a press statement tackling the recent decision by US President Donald Trump to impose a travel ban on individuals from seven Muslim-majority countries. Jones said that this order has caused anxieties and uncertainties across the international education sector. Trump’s policy also led to a fall in inquiries at the company's U.S. schools.
Navitas is one of the largest listed private educational companies in Australia. It has operations in Australia, North America, and Britain. Its business is running English and pre-university courses for foreign students and migrants.
