Seven Group’s underlying profit up

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SEVEN Group Holdings, owner of the WesTrac mining equipment empire and Coates Hire business, today posted an underlying profit for 2016-17 that is 17 per cent higher than the previous year.

The Ryan Stokes-led diversified company revealed it would sell its Chinese mining equipment business, which it has owned since 2001, for $540 million.

Mr Stokes said the money would be used to invest in Seven Group’s Australian business, including the local WesTrac operation, which sells Caterpillar machinery.

The sale would eliminate “increased credit risks associated with operating in China”, Seven Group said.

“WesTrac China has been a strong performing business for SGH and this is the right time to realise the value of what we have achieved,” Mr Stokes said.


media_cameraRyan Stokes.

“SGH’s relationship with CAT remains one of our most important and enduring partnerships and we continue to be strong supporters of their dealership model. We remain interested in any additional dealership opportunities with Caterpillar.”

The sale to Lei Shing Hong is subject to regulatory approval in China and expected to be completed by October.

The group’s full-year profit slipped 77.4 per cent to $44.5 million because of a $245.6 million writedown in the value of its 41 per cent stake in Seven West Media, publisher of PerthNow and The Sunday Times.

Earnings from other extraordinary items trimmed Seven Group’s total impairments to $169.2 million.

Group revenue of $2.28 billion was up 2 per cent, earnings before interest and tax surged 9 per cent to $297.2 million and underlying net profit after tax was up 10 per cent at $187.1 million.

The WesTrac division lodged a 22 per cent fall in sales for the year after a $148 million drop in deliveries to the Gina Rinehart-controlled Roy Hill iron ore operation. Non-mining sales were up 11 per cent.

Servicing ageing fleets saw parts sales jump 21 per cent but competition for service work trimmed revenue growth at WesTrac to 4 per cent.

Strong construction activity on the east coast saw the Coates Hire business report a 5 per cent bump in revenue and EBIT margins widening from 11 per cent to 15 per cent.

Seven Group’s investment in Beach Energy is being rewarded, with the energy play reporting underlying net profit after tax of $162 million, up from $36 million in 2015-16.

Seven Group’s net debt dropped to $1.308 billion from $1.367 billion and it will deliver a fully franked dividend of 21¢ a share, up 1¢ on last year.

Shares in the company are trading around 10-year highs and last changed hands for $11.80.



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