For all the upbeat talk about the year to June 30 and beyond, Seven Group Holding’s decision to hold its final dividend and full year dividends steady on 2020-21 tells us a lot about what the company really thinks about the coming financial year.
Directors of Kerry Stokes’ master company left the final at 23 cents a share, unchanged from a year ago, as is the full year payout of 46 cents a share.
That’s despite Seven Group saying it “is carrying strong momentum into FY23, with a positive outlook across all of its businesses.”
“SGH expects to capitalise on this underlying momentum, to deliver high single to low double-digit Group UEBIT (underlying earnings before interest and tax) growth relative to FY22, subject to no material change to market conditions.
But the reality is the steady dividend is a sign of caution, a ‘watch and see attitude’, despite the group enjoying a prosperous 2021-22. The listed companies- Beach Energy and Seven West Media either paid little to shareholders (2 cents a share at Beach, nothing at Seven West but a buyback of up to $100 million).
In the year ahead, Seven Group said its WesTrac business “is expected to benefit from strong customer activity and an ageing mining fleet, driving growth in support sales and a robust pipeline of committed new equipment deliveries”
The company expects to get more orders from coal mining companies updating the fleets.
“Strength in the infrastructure and construction pipeline should benefit both Coates and Boral.
“At Coates, robust customer activity and demand for solutions give us confidence that strong conditions will continue in FY23.
“At Boral, the performance journey is set to be accelerated by the appointment of their new CEO&MD, and we expect earnings recovery and margin growth in FY23 subject to energy input cost and management.
At Beach (energy), “elevated energy pricing and demand supports a strong earnings outlook, particularly when combined with repriced gas volumes and emerging uncontracted volumes.”
And the 40% owned Seven West Media “expects to capitalise on its position as the number one total television network in Australia, to grow its revenue share and increase digital earnings, while maintaining tight cost control and reducing leverage.”
For the year to June 30, Seven Group reported an “underlying” earnings before interest and tax (EBIT) from continuing operations of $987.1 million, up 24.6% on a reported basis and 8.3% on a pro-forma basis.
Seven Group said its statutory EBIT of $1,043.7 million was up 12.8%.
“Underlying net profit after tax (NPAT) of $577.3 million was up 14.4%. Statutory net after tax profit of $607.4 million was down 4.3%, thanks to impairments and transaction costs at Boral and Seven West Media.
With the acquisition of control of Boral, group revenue jumped 65% to more than $8 billion from $4.4 billion previously.
The shares rose more than 2% to $18.08 as investors seemed to appreciate the caution.
