Seven Group profit slips as revenues fall

27/02/2014 - 13:19

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Seven Group chief executive Don Voelte.

Seven Group Holdings has lodged a 42 per cent reduction in revenue for the first half of the 2014 financial year, as a difficult and challenging market for its industrial services divisions took its toll on the company’s earnings.

Seven Group said today its revenue for the six months to December 31 was $1.57 billion, down from $2.7 billion in the previous corresponding period.

The revenue fall resulted in an underlying net profit drop of 44 per cent, to $131.8 million.

The company’s statutory net profit was up 3 per cent, however, to $264.7 million.

Significant items that boosted the group’s statutory net profit included a $127 million impairment reversal on the value of its investment in Seven West Media, and a $32.2 million gain made on the sale of other investments.

Chief executive Don Voelte said the past 12 months had been a difficult and challenging market, resulting in significant cost reduction initiatives across Seven Group’s industrial services businesses.

Product sales were down 64 per cent on the previous corresponding period for Seven Group’s WesTrac Australia division on the back of softening conditions in the coal sector and a reduction in new iron ore projects.

WesTrac China, however, delivered Seven Group $US78 million in operating cash flow, aided by the growth of engine sales to the oil and gas sector.

The AllightSykes division recorded a revenue fall of 45 per cent on the back of weaker demand, while the value of Seven Group's listed investment portfolio was $857.2 million at December 31.

The group's major media investment, Seven West Media, reported a net profit of $150.1 million for the same period.

Seven Group said it was focused on strengthening its WesTrac divisions in Australia and China, but warned it remained cautious on trading conditions for the coming six months.

The company will pay an interim dividend of 20 cents per share, fully franked, unchanged from the previous corresponding half year.

Mr Voelte said Seven Group would continue to pursue acquisition opportunities to extend and diversity its operations.

“We are focused on sectors expected to exhibit higher growth, in which Australia is perceived to hold a comparative advantage, but are also evaluating offshore opportunities,” Mr Voelte said in a statement to the ASX.

“This investment process in ongoing and we are well-positioned to act on opportunities in a disciplined and expedient manner given our low leverage, liquidity and the listed portfolio.”

At 1:00PM, WST, Seven Group shares were down nearly 2 per cent, at $8.01. 

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