Lending Association

Seven Group maintains steady dividend despite record revenue and earnings

Seven Group Holdings (ASX:SVW), led by Kerry Stokes, has once again demonstrated its resilience in the face of economic fluctuations, announcing record revenue and earnings for the December half-year period. However, in a move reflecting its strategic approach to financial management, Seven Group has opted to maintain its interim dividend at 23 cents per share for the seventh consecutive six-month period.

The decision to keep the dividend unchanged comes despite the company’s upgraded full-year guidance, indicating a very solid performance in the latter half of 2023. Directors of Seven Group reiterated their commitment to deleveraging and stability in dividend payouts, citing the company’s long track record of reliable returns to shareholders.

Seven Group’s diversified portfolio, comprising basic mining, construction, and building assets such as Coates and Westrac, has contributed significantly to its robust financial performance. While Beach Energy and Seven West Media have shown mixed results, the surge in earnings and cash flows from the 69% owned Boral Group has been a standout factor in driving the company’s success.

Notably, Seven Group’s majority ownership by the Kerry Stokes family underscores the stability of its dividend policy. However, stakeholders beyond the family’s interests may have anticipated a higher dividend payout given the company’s stellar performance.

The December half-year results reveal a 17% increase in group revenue, reaching $5.4 billion, driven by heightened customer activity and demand across key sectors such as mining production, infrastructure, and transitional energy. Earnings before interest, taxes, depreciation, and amortization (EBITDA) soared to $1.017 billion, marking a 21% increase, while EBIT surged by 28% to $764 million.

Despite a slight dip in statutory figures, primarily attributed to impairments at Beach Energy and Seven West Media, Seven Group remains optimistic about its future prospects. The forecasted continuation of strong performance from Boral Group is expected to bolster earnings through the June half-year and into 2024-25, prompting an upgrade in the company’s guidance.

Ryan Stokes, CEO of Seven Group, attributed the remarkable results to the outstanding performance of the company’s industrial services segment, encompassing WesTrac, Coates, and Boral. He lauded the dedication of Seven Group’s workforce in delivering exceptional service to customers, which has been instrumental in driving revenue and earnings growth.

In summary, Seven Group’s steadfast commitment to financial prudence and stability amidst record revenue and earnings showcases its strategic foresight and resilience in navigating volatile market conditions. While shareholders may have hoped for a higher dividend payout, the company’s focus on long-term sustainability and value creation remains unwavering.