Kerry Stokes’ Seven Group Holdings (ASX:SVW) saw pre-tax earnings jump 20% for the year to June, as results from two associated companies, Beach Energy and Seven West Media, collapsed in the same period.
Commentary from the company made it clear it was its products and services to the mining, construction, and home building sectors—newly boosted by Boral—that lifted revenue and earnings.
Revenue rose 10% to $10.6 billion, a new high, helping the shares rise more than 8% by just after midday Wednesday.
While CEO Ryan Stokes said infrastructure projects were key productivity drivers and higher spending had “been a long time coming”, the sharp drop in profit reported by Seven West Media (SWM) and the massive loss reported by Beach were negatives for the company.
Seven Group owns 30% of Beach and 40% of SWM, and the weakness in the results of both companies in the year to June saw another round of asset write-downs on the value of the shareholdings and assets.
These write-downs were included in significant items that totalled $386 million, seven times the $53 million reported in 2022-23.
That cut statutory profit 23% to $464 million.
The group said the lower statutory profit relates primarily to Seven Group’s share of impairments on production assets at Beach Energy and a mark-to-market impairment of Seven West Media interests and several other investments. $134 million related to the write-down in the value of the SGH 40.2% stake in Seven West Media.
Full-year underlying profit was up 30% to $850 million thanks to Westrac (Caterpillar machinery), Coates (services), and Boral (cement/concrete).
The company expects another year with “high single-digit—less than 10%—growth in EBIT”.
EBIT for the year to June was up 20% to $1.419 billion—boosted by a 28% rise from its industrial services businesses.
Seven declared a final dividend of 30 cents per share, revealed last month after the Boral clean-up bid closed. That was up 30% on the previous year’s payout and took the total for the year to 53 cents, up from 46 cents for the year before.
“Over the last decade, [Seven Group] has delivered an 18% compound annual growth rate in EBIT, highlighting the quality and core-plus nature of our industrial services businesses, enhanced by operating discipline and financial agility,” Ryan Stokes said in the earnings release.
“Our investment in people, technology, and capacity through the year has positioned us to meet growing customer demand and underpins our positive outlook and FY25 EBIT growth guidance,” he said.
“We are also excited about investment opportunities within our existing portfolio to drive growth over the medium to long term, including adjacencies at Boral in recycling and property.”
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