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Seven Group Holdings today: high revenue, low profit, and a retired Director

ASX 200
ASX:SVW      MCAP $14.51B
21 August 2019 19:40 (AEST)

Seven Group Holdings has reported a $695 million in earnings before interest and tax (EBIT) for the 2019 financial year — a 40 per cent increase on last year’s $497 million.

These earnings are complemented by a 27 per cent increase in revenue, which ended the year at $4.08 billion.

However, while the investment group placed a lot of its focus on an underlying net profit after tax (NPAT) of $478.9 million — 49 per cent up on last year — Seven Group faced some serious one-off costs this last financial year.

As such, statutory profits actually fell 47 per cent for the company, coming in at just $219.2 million compared to FY18’s $415.6 million.

While shares in Seven Group dropped almost three per cent in just half an hour after today’s market open, the huge increase in revenue seems to have kept the company’s shareholders content. Seven Group shares spent the day slowly climbing from their slump, and closed 2.7 per cent up — worth $17.13 in a $5.81 billion market cap.

The retained confidence in the company is likely the result of some of Seven Group’s operating segments. Beach Energy, in which Seven Group holds a 28.6 per cent interest, more than doubled on its earnings for the company, coming in at $156.6 million compared to last year’s $71.8 million.

Similarly, WesTrac, which is owned wholly by Seven Group, recorded segment earnings for Seven Group of $285.6 million compared to the $202.7 million recorded last year.

These strong results, however, sit in the shadow of the $444.4 million profit loss reported by Seven West Media yesterday. Seven Group holds a 41 per cent interest in Seven West, and the media investment failed to pay off for the company this year.

Seven Group Managing Director and CEO Ryan Stokes said in a letter to shareholders today that while 2019 was a strong year for the company, future growth will be focussed on three main markets: mining production, infrastructure investment, and East Coast gas demand.

“Whilst we have entered a period of economic uncertainty, these sectors continue to perform well, and our objective is to sustain and grow the level of profitability we achieved in FY19 and ensure that our businesses continue to hold their market leading positions,” Ryan said.

He added that the company’s industrial businesses are already well placed to benefit from both the mining production cycle and continued investment in infrastructure.

To top off the big day of announcements for the company, Seven Group revealed today that long-standing Director Bruce McWilliam will retire from the company Board. He has been a director of Seven Group since it was still called Seven Network Limited in 2003.

Bruce will, however, remain in his position as Commercial Director at Seven West Media.

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