Seven Group Holdings Upgrades FY19 Outlook; Stock Surged Up On ASX

  • Apr 30, 2019 AEST
  • Team Kalkine
Seven Group Holdings Upgrades FY19 Outlook; Stock Surged Up On ASX

On 29 April 2019, diversified operating and investment group Seven Group Holdings Limited (ASX: SVW) provided a trading update with regards to its operating businesses and equity accounted investments, which in combination are performing ahead of what is expected out of them this year till date.

The company’s underlying strength of its 3 strategic growth drivers like mining production, infrastructure investment and domestic energy, reflected in the form of providing a boost to its revenue and profit to SVW.

In its 1HFY19 report, the company highlighted that activity in WesTrac (one of the SVW’s subsidiaries) might have been fast-tracked by the consumers in quarter two, which could impact in a possible fall in 2H FY19 guidance. The prospect has not taken place, and consumer activity has maintained its resilience.

Besides, the company had also highlighted that Coates Hire (owned by SVW) was going through some weakness in beginning the project, against the amount it was budgeted for. The same pattern kept on emerging in the third quarter as well, especially in the Queensland region, which was also influenced by unseasonal wet climate conditions and followed by floods.

The Energy Segment of the company continued to exhibit solid result with production and price aiding the renewed outlook.

As an outcome of the enhanced performance, the company anticipates its original outlook for FY19 underlying EBIT to be up by 25% compared to FY18 underlying EBIT, based on continuing operations. At present, the Group is anticipating FY19 EBIT to be around 40% on FY18 underlying EBIT, based on continuing operations, which for the avoidance of doubt was $496.9 million.

In its Half-Year Financial Report for the period ending on 31 December 2018, the company noted Revenue from ordinary activities up by 45.04% to $2,026.5 million from $1,397.2 million in the previous corresponding period (pcp). The total assets of the company by the end of the half-year period stood at $6,183.5 million from $6,112.9 on pcp. The total liabilities of the company were noted at $3,299 million from 3,277.6on pcp. The total equity was noted at $2,884.5 million from $2,835.3 on pcp.

From the cash flow perspective, the net operating cash flows at the end of the period stood at $231.9 million from $ 112.8 on pcp. The cash and cash equivalents at the end of the period stood at $76.7 million from $350.7 on pcp.

During the half-year period, the company recorded an increase in WesTrac parts shipments by 27% on pcp. The results were further driven by customer demand for autonomous technology conversions. Also, during the period, Coates Hire competed aggressively and kept on enhancing its operational efficiency. Beach Energy delivered a robust production performance and free cash flow.

The group’s outlook consisted of:

Gaining leadership in respective markets as all businesses were well positioned to benefit from market drivers in their respective sectors, supplemented by ongoing investment in technology/digitisation and disciplined approach on costs and cash flow.

On the Group’s EBIT guidance front, FY19 EBIT was expected to be approximately 25% above FY18 underlying EBIT on a continuing operations basis.

The stock of the company is currently trading at A$19.610, up by 3.211% (as on 30 April 2019, 3:37 PM AEST).


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