Endeavour lifts profits despite hitting disruption bingo

Covid, floods, staffing, supply chains. That’s what we call the 2022 disruption bingo, which has this morning been claimed by Woolworths liquor chain spin out – Endeavour Group (ASX: EDV).

The owner of well known brands such as Dan Murphy’s and BWS has delivered positive results despite this extensive list of challenges however, with their FY22 results featuring NPAT of $495m, up 11.2% YoY and issuing a final dividend of 7.7c, up 10%.

Hotel closures (under the Company’s ALH Hotels brand) were perhaps the most impactful challenge faced by the group. With Covid related closures particularly impacting the first half of the FY, then floods and supply issues lead to cost pressures in the second half. Looking ahead, Endeavour sees a continued recovery in the Hotels segment, expecting Australians to return to socialising as normal, and Victorian gaming tax changes to work in their favour to the tune of approximately $20m in EBIT.

In addition to their legacy business, Endeavour is seeing impressive growth in their endeavourX tech segment which allows users to buy drinks directly from the company via their app, or pay at the table for their hospitality locations. The segment saw a 17% rise in sales to $1.0b, and a 15% rise in active My Dans members to 4.5 million.

“The Financial year 2022 was a significant one for Endeavour Group, our first as an independently listed business, and together we delivered strong financial results. Our Retail segment had an exceptional first half, and our Hotels segment came back 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 was up 11.2%.” said Endeavour Group Managing Director and CEO, Steve Donohue.

“These achievements were delivered against a backdrop of ongoing impacts from COVID-19, severe weather events, team shortages and a range of supply chain disruptions. Notwithstanding these challenges, the commitment and passion of our team enabled these positive financial outcomes. 

“Australians are returning to socialising in hospitality settings, and the trend towards discovering new drinks is continuing. While we anticipate that the operating environment will remain challenging, I’m confident our team of exceptional people, our customer-focused strategy, and our disciplined approach to financial management will enable us to continue to deliver for our customers, partners, team members and shareholders.” 

The result is the first full year as an independent entity for Endeavour after their spin-out IPO from Woolworths in June 2021. Shareholders should be happy with their return if they held from IPO, which listed at an issue price of $6.50, with shares now sitting at $7.50 and a 12-month high of $8.40.