Shares in Seven Group Holdings dropped 7.6 per cent after chairman Kerry Stokes resigned but it seems to be investors’ displeasure with the company’s 2021-22 outlook that kicked the shocks from under the price.
The shares ended the day at $21.15, the lowest they have been for six weeks – when the company was closing in on Boral.
The company said Mr Stokes would retire from the board at November’s AGM a move that will mark a shifting of the guard at the company and in corporate Australia.
His son Ryan is currently CEO of the company. Mr Stokes will remain a consultant for three years and will remain chairman of Seven West Media.
Current Seven Group director and former Southcorp and Coca-Cola Amatil boss Terry Davis will take over as chairman from Mr Stokes.”
Seven Group, which owns the Westrac and Coates equipment leasing businesses as well as a large stakes in Beach Energy, Boral and Seven West Media, posted a full-year net profit of $634 million.
Seven Group now has a 70% stake in Boral which reported solid results earlier this week but didn’t pay a final dividend despite raising billions of dollars from asset sales here and especially in the US where a further asset is about to be sold.
Seven Group will pay a final fully franked dividend of 23 cents a share, an increase of 10% on 2020. That makes a total for the year of 46 cents.
Seven Group’s underlying earnings before interest and tax also rose during the period, up 7% to $792.1 million, on the back of strong performances in its Westrac and Coates equipment leasing businesses.For that Seven Group and Stokes can thank the WA iron ore boom – Westrac has major customers with the mining giants for new machines and services.
But while the outlook view wasn’t clear, it was probably the lack of any clarity on what will happen to the 70% owned Boral and its stash of cash, with more to come.
Punters, hedge funds and other speculators know there’s some sort of capital management deal coming from Boral to reward shareholders, with Seven Group and the Stokes family in the front of the queue.
Boral failed to clarify the situation earlier this week – it couldn’t really say anything because Seven Group now has control.
