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It seems like a very low margin business. If EBITDA is $93 million then NPAT might be for example something like $30 - $60 million which equates to an NPAT margin of roughly 1 - 2%. It would not take much going wrong wrong for this business to turn from profitable to loss making.Supermarkets for example even though they have a low profit margin they have very high sales volume (in relation to assets) and operate in an oligopoly where any price increases or cost blowouts are easily able to be passed onto consumers. I am far less certain that if Paragon had major cost increases or cost blowouts etc they would be able to pass on all of the increased cost to their customer base although I could be wrong as I do not follow the company closely. To me their low profit margin is a major cause for concern.
It seems like a very low margin business. If EBITDA is $93 million then NPAT might be for example something like $30 - $60 million which equates to an NPAT margin of roughly 1 - 2%. It would not take much going wrong wrong for this business to turn from profitable to loss making.
Supermarkets for example even though they have a low profit margin they have very high sales volume (in relation to assets) and operate in an oligopoly where any price increases or cost blowouts are easily able to be passed onto consumers. I am far less certain that if Paragon had major cost increases or cost blowouts etc they would be able to pass on all of the increased cost to their customer base although I could be wrong as I do not follow the company closely.
To me their low profit margin is a major cause for concern.
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