Endeavour Group earnings show Aussies still love a drink despite cost pressures
Dan Murphy’s and BWS operator Endeavour Group has reported higher profits, sales and earnings this reporting season.
The numbers come despite constantly rising alcohol tax, inflation and cost of living pressures.
Australia’s biggest drinks and pubs operator reported a 6.9% uptick in net profit after tax to $529 million, slightly lower than analyst expectations for a full-year profit of around $543 million.
Group sales rose by 2.5% to $11.9 billion while earnings before interest tax jumped by 10.7% to $1 billion.
“Our hotels offer welcoming and affordable social moments, from a drink and meal with friends to live music and quality accommodation,” chief executive Steve Donohue said.
Live music played a huge part in profits, with the group selling 172,000 tickets in the 52 weeks to June 25.
Shareholders will be happy as Endeavour will pay out a full-year dividend of 21.8¢, a 7.9% increase on the year prior.
The hotels division saw sales jump 31% to $2 billion and earnings rising 35.9% to $428 million.
The group’s ALH Hotels business operates over 350 venues across the country.
The retail arm which covers Dan Murphy’s, BWS and Pinnacle Drinks slid 1.8% to $9.9 billion. Endeavour opened eight new Dan Murphy’s stores and 18 new BWS stores last financial year.
While estimating the group’s pokies earnings is tricky as gambling earnings are not broken down, analysts estimate that its more than 12,500 poker machines across its 300 hotels, generates at least one-quarter of overall revenue.
It should be noted that under the Victorian government’s crackdown on poker machine losses, Endeavour will have to pay a total of $310 million across 10 years in gaming entitlements to the state.
Endeavour made a $42 million payment in the 2023 financial year. It will pay approximately $56 million annually from the 2024 financial year onwards for five years.
Those losses may be offset by current cost cutting measures.
“We have taken $90 million of costs out across the group since [demerging from Woolworths], including $60 million in [the 2023 financial year]. Over the next three years we’re targeting a further $200 million in savings,” Donohue said.
Donohue believes consumer demand will remain resilient.
“Our offering of affordable and accessible experiences, leading value and convenience and the widest range of products continues to resonate, putting our brands at the heart of Australia’s social moments.”
Endeavour Group is currently valued at $10.7 billion.
Jonathan Jackson, 16th August 2023
