Endeavor band ads bounce

Endeavor Group (EG) released its FY22 financial results, which reflect industry challenges over the past 12 months, with hotel closures creating tailwinds for retail and then the effects of the easing of restrictions in the second half of the year.

As a group, EG had sales of $11.6 billion, matching last year, which the group said was “a strong business result given that we were again hit by a complex and volatile business environment”.

Group EBIT increased 2.8% to $924 million, driven by the partial recovery of the hotel segment and another strong result in retail, which generated EBIT of $666 million, also in line with F21. Group profit for the year, after income tax, was $495 million, up 11.2% from a year ago.

EG’s hotel business traded 231 days in the financial year, down from 195 in FY21, with the majority of the impacts occurring in New South Wales and Victoria in the first semester of the year.

Despite these challenges, hotels reported total sales of $1.5 billion, compared to $1.4 billion in FY21, with stronger EBIT of $315 million, up 20, 7% compared to the previous year.

Trade recovered strongly in the second half of the fiscal year as COVID-19 restrictions were lifted and sales rebounded, surpassing pre-COVID-19 levels, up 7.3% from in the second half of fiscal year 2019.

Managing Director and CEO Steve Donohue said: “Australians are returning to socializing in hospitality establishments, and the trend of discovering new drinks continues. Although we expect the operating environment to remain challenging, I am confident that our team of exceptional people, our customer-focused strategy and our disciplined approach to financial management will enable us to continue to provide our customers, partners, the team and shareholders.”

EG’s FY22 retail sales were $10.1 billion, which was slightly lower than FY21 but 19.1% higher than FY2019, again highlighting the impact of the pandemic on onsite and offsite commerce.

Retail gross profit margin improved 89 basis points to 23.2%, which EG said was supported by “premiumization of new higher-margin products and demand for Pinnacle Drinks products.” , as well as a lower level of promotional activity in the market.

The group also named spirits and premixes a “strong point”, with seltzer water performing particularly well, with sales in these categories increasing by more than 40% over the past three years. The group also highlighted the acceleration of low and zero alcohol products, with five of the 10 fastest growing subcategories being low and zero alcohol.

Donohue said, “Fiscal 2022 was a significant one for Endeavor Group, our first as an independent publicly traded company, and together we delivered strong financial results. Our retail segment had an exceptional first half, and our hotel segment rebounded strongly in the second half.

“As a group, sales were in line with last year at $11.6 billion and net profit after tax of $495 million increased by 11.2%. These achievements were achieved in a backdrop of continued impacts from COVID-19, severe weather events, crew shortages and a series of supply chain disruptions.Despite these challenges, our team’s commitment and passion have enabled these positive financial results.

“We have made targeted investments in our hospitality business, acquiring five new hotels and completing 40 renewals, while enhancing our beverage retail network with ongoing renewals and innovative new store formats, as well as 32 net new stores.

“Investment in our digital customer connections has been accelerated in recent years in light of COVID-19 restrictions and we emerged from F22 with both record sales and a record number of customer connections. We were also delighted to welcome Josef Chromy Wines to our Paragon Wine Estates portfolio and are proud of the accomplishments of our Pinnacle Drinks team who have won hundreds of quality awards over the year.

EG’s total store network and pub portfolio includes 258 Dan Murphy’s stores, 1,417 BWS stores, up 7 and 25 respectively, plus 344 hotels, including five managed clubs, with five hotels acquired during the year.

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