Endeavour share price drops 9% despite $495 million profit

The Endeavour share price is lower today after the company posted a mixed earnings card for FY22.

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Key points

  • The Endeavour share price dropped by 9% this morning after the company posted its FY22 results 
  • Revenue was the same as FY21 while the bottom line expanded
  • The company expects headwinds for FY23 in the form of inflation, supply chain shortages, and other forces

The Endeavour Group Ltd (ASX: EDV) share price is well into the red this morning after the company posted its earnings card for FY22.

Shares in the company opened at $7.82 before slipping to a low of $7.52 — a 9.1% loss. The Endeavour Group share price is now $7.55 at the time of writing.

Let's go over the highlights of the report.

Endeavour share price slides on mixed FY22 report

The key metrics are as follows:

Both retail and hotel operating segments contributed strongly in 2H FY22. Hotels contributed the most EBIT for the year, growing 20.7% to $315 million.

The company notes that it delivered growth in its top and bottom lines amid headwinds that rocked its industry. These included "ongoing impacts from COVID-19, severe weather events, team shortages, and a range of supply chain disruptions."

Endeavour declared a final fully franked dividend of 7.7 cents per share. The total dividend payout is $138 million. The record date is 1 September and the dividend will be paid on 16 September.

What else happened in FY22?

Endeavour acquired five new hotels and 40 lease renewals in FY22. The drinks side of the business also made significant progress, adding 32 new stores and lease renewals.

Endeavour cited COVID-19 as an accelerant in the digitalisation of its business model, which included 'order and pay later', and facial recognition technology at some of its hotels.

Initiatives such as these and others led to record sales and record connections with new customers, the company said.

What did management say?

Endeavour managing director and CEO Steve Donohue said:

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.

What's next?

Endeavour noted that demand for its drinks and hospitality offerings would continue to bounce back from the effect of COVID-19. This is currently reflected in the past seven weeks of trading in FY23. However, some headwinds will persist in putting pressure on the company's results moving forward.

Its one-year growth rates are expected to be distorted as it cycles through the impacts of COVID-19 in the first half of FY23.

Moving forward, the company stated it will need to contend with "inflation, limited team availability and the potential for supply chain disruption".

Endeavour share price snapshot

The Endeavour share price is currently up 11% year to date. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 8% over the same period.

Endeavour's market capitalisation is roughly $14.81 billion.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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