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Endeavour (ASX:EDV) share price rises as investors cheer HY23 profit jump

The Endeavour Group Ltd (ASX: EDV) share price is up more than 2% after reporting its FY23 half-year result, with profit climbing strongly.

Endeavour is the liquor retailer (including Dan Murphy’s and BWS) and hotel business that was divested out of Woolworths Group Ltd (ASX: WOW).

Endeavour HY23 result

Here are some of the highlights from the report:

  • Group sales grew by 2.6% to $6.5 billion
  • EBIT (EBIT explained) went up 15.8% to $644 million
  • Net profit after tax (NPAT) increased 17% to $364 million
  • Profit / earnings per share (EPS) rose 16.7% to $0.203
  • Dividend per share increased by 14.4% to $0.143

The business said that it had a “standout December” and it was the first restriction-free festive season in three years. There was a “stabilisation” of its core markets.

Its profit benefited from the return of hotels to full operation and careful management of the ‘deleverage impacts’ of lower retail sales as it compares against COVID-driven peaks.

The business has implemented a number of things to improve elements of the business, including click and collect, electronic shelf labels and image search functionality in apps. Also, its hotels business is benefiting from the growth of ‘order and pay at table’.

Trading update

Endeavour said that in the first five weeks of the second half of FY23, it has continued to see trading “stabilise” across the group.

Retail sales were in line with the prior corresponding period, with 0.2% growth. The hotels segment saw sales increase by 31.5% compared to last year – when there were fewer patrons at the hotels and team shortages because of Omicron. Growth is useful for the Endeavour share price.

It hasn’t seen any material softening in key customer indicators, though management are watching closely with the possibility of broad economic uncertainty.

But, management points out that the business operates in relatively predictable segments.

The company also believes it has good “organic pathways to grow” and a “strong pipeline of opportunities” across its portfolio.

Final thoughts on the Endeavour share price

This was a solid update, with a good improvement in profit. It’ll be interesting to see if the business can continue to keep growing profit in 2023 with the future looking uncertain. Population growth and a return of tourists should help, but the proposed change for pokies to become cashless in 2028 could have a major future impact on profit.

I think there are other ASX dividend shares that have stronger outlooks.

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