Australian alcoholic drinks retailer and hotel operator...

Australian alcoholic drinks retailer and hotel operator Endeavour Group [ASX:EDV] has released strong results for 1H FY23, largely attributed to uninhibited celebrations off the back of restrictions lifting for the first time in three years.

The group posted total group sales, which increased by 2.6% compared to the same time last year, with a total of $6.5 billion earned.

Even better, the group’s EBITDA was pushed up 15.8% to $644 million.

Endeavour’s shares were rising 2.5% by the early afternoon on Monday to around $7 a pop. The consumer defensive stock has moved up nearly 9% so far in 2023 and 12% in the past 12 months.

Source: tradingview.com

Endeavour’s sales, EBIT and profits rise in 1H 2023

For the first half of the financial year 2023, Endeavor’s sales increased by 2.6% to $6.5 billion.

Its group EBIT (earnings before interest and tax) saw a further increase of 15.8%, totalling $644 million, while NPAT surged by 17% totalling $364 million.

These results, boosted by lifted restrictions, enabled a reward for investors in the form of a dividend increase of 14.4% at 14.3 cents a share.

Earnings per share had also seen an uplift of 16.7% at the same time last year, at 20.3 cents each in the half year.

Finance costs of $119 million were $14 million higher than H1 F22 due to rising interest rates, yet the company still managed to deliver higher profits than last year.

EDV’s hotel business performed well in the period also, with sales up by 31.5% on last year.

Steve Donohue, Endeavour’s CEO, commented:

‘Our team has delivered strong results Group-wide, with a standout December from the first restriction-free festive season in three years. H1 Group sales of $6.5 billion were 2.6% higher versus the prior comparative period, demonstrating the stabilisation of our core markets post-pandemic.

‘Pleasingly, our H1 EBIT result of $644 million was 15.8% higher versus prior period, reflecting both the return of Hotels to full operation and our careful management of the deleverage impacts of lower Retail sales as we cycle COVID driven peaks. On a three-year 1 comparative basis, both Hotels and Retail sales are trading well ahead with 4.7% and 4.5% CAGRs respectively.’

Source: EDV

EDV’s outlook

Donohue pointed out that EDV’s network of brands and partners were greatly beneficial over the festive period, especially as December saw customers return to normal holiday activities and social events.

Domestic travel was also noted to have returned to regional and coastal towns, with stores and hotels in these areas said to have performed strongly.

It will be interesting to see how the rest of the year pans out, especially after Endeavour revealed trade had stabilised in the first five weeks of the second half, in line with last year’s.

EDV also revealed its new Chief Financial Officer, Kate Beattie, who is to step into the role in June, replacing Shane Gannon.

Beattie has been in the group’s leadership team for five years and will work with Gannon as Deputy CFO over the coming months, ensuring a smooth transition.

Regards,

Mahlia Stewart,

For Money Morning

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