Seven Group shares took a bit of an early pasting yesterday, losing 7% in value at one stage despite the company releasing booming half year results.
Some analysts said the market was not impressed with its outlook for 2022, others said investors had been looking for some sort of capital management announcement from the company which made squillions from taking control of Boral, and then participating in a huge capital management deal by that company.
But what can’t be ignored that Seven, like so many other companies on the ASX yesterday, got caught up with the negative reaction to what was Russia’s effective annexation of parts of Eastern Ukraine. Russia sent in armed forces into two regions only hours after President Putin had signed a decree claiming these regions were ‘independent’.
The shares fell as low as $20.85 before recovering to end the day down 3% at $21.67.
Given that Seven Group more than doubled revenue and earnings for the December half year investors were not all that chuffed with the steady interim dividend of 23 cents a share from Kerry Stokes’ master company (which not only controls Westrac and Coates Hire, but also Boral, Seven West Media and Beach Energy).
Seven’s revenue rose 105% to $4.84 billion, while trading revenue from continuing operations edged up a more modest 3.1% to $3.95 billion.
Earnings before interest and tax (EBIT) from continuing operations rose 29% to $510.9 million, while reported net profit (including the gains from the Boral play) soared 235% to $1.22 billion.
Seven said its statutory net profit after tax included a gain of $757 million relating to the Boral acquisition and on an underlying continuing operations basis, the net profit after tax of $302 million was up 21.5% for the half-year.
“Today’s result demonstrates the benefits of our strategy to own a diversified portfolio of high-quality businesses across varied segments of the economy,” Seven Group CEO Ryan Stokes told shareholders and analysts this morning.
Group EBIT for the June financial year is now forecast to rise between 8% and 10% on 2021. This could see an EBIT figure between $984 million and $1,002 million.
Seven said increased its 2021-22 guidance for Coates Hire’s EBIT to ‘low double digits’ from ‘high single digits’, saying this reflected the strong momentum during the first half.
“Guidance for WesTrac ‘low single digit’ EBIT growth is retained,” it said, which was clarified later in a call with analysts to mean WesTrac’s performance will be “slightly stronger” for the June half compares to the first half and Coates Hire performance will be flat.
Seven also confirmed that it will pay off the transaction bridge loan facility of $2.97 billion, which was used to finance the acquisition of its 70% stake in Boral, by end of March.
