The Endeavour Group Ltd (ASX: EDV) share price is falling on Monday.
In morning trade, the drinks giant's shares are down 2% to $5.17.
This follows the release of the company's half-year results.
Endeavour share price tumbles on results
- Sales up 2.5% to $6,667 million
- Earnings before interest and tax (EBIT) up 2.6% to $661 million
- Profit after tax down 3.6% to $351 million
- Fully franked interim dividend flat at 14.3 cents per share
What happened during the half?
For the six months ended 31 December, the Dan Murphy's owner reported a 2.5% increase in sales to $6,667 million. This reflects a 2.5% lift in Retail sales to $5,583 million and a 2.7% increase in Hotels sales to $1,084 million.
Endeavour's Retail segment's growth was driven by an increase of 2.9% from Dan Murphy's and BWS. Management notes a particularly strong performance across the key retail sales events of Cyber Week and the Christmas period.
On a comparable sales basis total Retail grew by 1.8%, while BWS and Dan Murphy's combined comparable sales growth was 2.1%. Endeavour's Ecommerce sales grew 6.2% to 9.2% of total Retail sales.
Endeavour's EBIT increased 2.6% to $661 million for the half. This reflects a 4.3% increase in Retail EBIT and a 1.6% lift in Hotels EBIT.
Unfortunately, higher finance costs weighed on its profits during the period. Finance costs were up 28.6% to $153 million due to higher interest rates. This ultimately led to Endeavour's profits after tax falling 3.6% to $351 million.
But that didn't stop the Endeavour board from holding its fully franked interim dividend at 14.3 cents per share.
Management commentary
Endeavour's CEO, Steve Donohue, was pleased with the half. He said:
Our first half result demonstrated the resilience of Endeavour Group. Group sales grew by 2.5% to $6.7 billion, with Dan Murphy's and BWS both driving increased Retail sales, and an improved food and bar offering delivering growth in Hotels sales. Group EBIT increased to $661 million, benefiting from our disciplined focus on cost optimisation, including $53 million in savings from our endeavourGo program, and gross margin management.
Dan Murphy's strengthened its position as Australia's preferred drinks destination for events through the festive season, with customers continuing to respond to our great range and Lowest Liquor Price Guarantee. We also opened four new large format stores in the half, taking our popular offer to even more customers. We continue to report market-leading customer metrics and our My Dan's membership program now has 5.4 million active members, with record high customer engagement.
Outlook
Management advised that the second half has started relatively flat.
Through the first seven weeks, trading activity in Retail was up 0.3%. This reflected subdued sales in January, followed by an improved start to February, which saw sales growth of 1.5% over the first three weeks of the month.
In Hotels, sales have remained steady in the third quarter, which is typically a quieter period following the festive season. For the first seven weeks of the half, it recorded year-on-year sales growth of 1%.
The Endeavour share price is down 9% over the last 12 months.
