Seven Group Rides Resources Rebound
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The rebound in the fortunes of Kerry Stokes was confirmed yesterday when his key company, Seven Group Holdings upgraded its earnings guidance, which in turn saw its share price surge to a record high.
Seven Group said its key operating business was performing ahead of expectations following a series of deals in late 2017 that saw it complete control over Coates Hire, exit China and reinvest here and lift its stake in Beach Energy in the takeover of Lattice Energy, the old Origin business.
Seven Group said yesterday it now expects underlying earnings before interest and tax for 2017-18 to be about 20% to 25% above pro-forma earnings before interest and tax (EBIT) of $376.9 million in 2016-17
Previous guidance in February was for a 15% increase.
Seven Group shares jumped to a record $21.76 before closing up 1.9% to $20.04. Its shares are up 76% in the past year and 31% so far in 2018. That has seen Mr Stokes rebuild his fortune that took a battering in the downturn in mining (and in China) and in local media - Seven Group owns 41% of Seven West Media.
The Eastern States infrastructure boom, plus dry weather and the rebound in mining and energy had all worked to boost earnings.
The company said mining production and infrastructure spending were major factors in improving revenue and profit for the group this year.
The very dry weather autumn weather and one-off projects had also helped in outstripping previous expectations.
CEO Ryan Stokes said the focus on industrial services and energy, underlined by a series of deals toward the end of last year, was paying off.
"The group has exposure to some strong underlying fundamental trends that are driving the Australian economy," Mr Stokes said.
"Our industrial services businesses continue to benefit from an upswing in mining and infrastructure activity levels.
"The group has successfully executed a number of value accretive transactions in the financial year to date, enabling us to enhance our exposure to these core sectors while also enhancing the capital structure."
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.