The Seven Group Holdings Ltd (ASX: SVW) share price jumped 7% in reaction to an impressive FY24 result. Here’s why.
Seven is a conglomerate that owns various businesses including WesTrac, Boral and Coates. WesTrac is the sole authorised Caterpillar dealer in Western Australia, NSW and the ACT. It also has substantial shareholdings in Beach Energy Ltd (ASX: BPT) and Seven West Media Ltd (ASX: SWM).
Seven Group FY24 result
Here are some of the highlights for the 12 months to 30 June 2024:
- Revenue increased 10% to $10.6 billion
- EBITDA rose 14% to $1.93 billion
- EBIT increased 20% to $1.42 billion
- Net profit after tax (NPAT) grew 30% to $850 million
- Final dividend up 30% to $0.30 per share
Looking at the main operating businesses, the total industrial services businesses’ EBIT grew 28% to $1.32 billion. That includes WesTrac’s EBIT rising 25% to $623 million, Boral’s EBIT growing 61% to $372 million, and Coates’ EBIT climbing 9% to $327 million. These divisions seem integral for the Seven Group share price.
Energy EBIT declined 13% to $99 million and media EBIT sank 58% to $25 million.
Beach Energy’s production declined 7%, though revenue rose 9% to $1.8 billion thanks to an 8% rise in higher gas prices. Beach Energy’s net profit declined 11%.
Seven West Media was hurt by weakness in television advertising, though its revenue share gain did increase to 40.2%. It did point to 0.5% growth in ‘linear audience’ and a 39% increase in online video minutes. Seven West Media is carrying out an organisational restructure, a cost reduction program and introduced a new operating model.
During the year, it sold its Sykes business for $89 million and sold Coates Indonesia for $63 million.
Dividend
Seven Group declared a FY24 final dividend of $0.30 per share for FY24. This was a 30% increase from last year.
The total dividends for FY24 came to $0.53 per share, which is an increase of 15%.
Outlook for the Seven Group share price
The ASX conglomerate share pointed to a good growth outlook for WesTrac with “strong demand for services” and “one of the strongest capital sales pipelines in a decade”.
For Boral and Coates, the “robust infrastructure and construction pipeline, and positive macro thematics support the customer activity outlook, with both businesses well-placed to leverage FY24 productivity gains into FY25 earnings growth.”
With Beach, a focus on operational efficiency, coupled with its production guidance of between 17.5 to 21.5 million barrels of oil equivalent (mmboe) “supports a positive outlook.
Putting all of that together, Seven Group is expecting high single-digit EBIT growth in FY25.
It has been another year of solid performance by the industrial side of the business. Can profit keep growing and growing? Perhaps, it’s difficult to say. But, Australia’s ongoing population growth, infrastructure spending and commercial construction is helping the ASX share. However, I’m not sure if today’s price is the best time to invest.
