The Endeavour Group Ltd (ASX: EDV) share price is under pressure on Monday morning.
At the time of writing, the drinks giant's shares are down 2.5% to $5.39.
This follows the release of the company's full year results before the market open.
Endeavour share price falls on FY 2024 results
- Group sales up 3.6% to $12.3 billion
- Group operating EBIT 4.9% to $1.1 billion
- Group net profit after tax down 3.2% to $512 million
- Full year dividend flat at 21.8 cents per share
What happened during the year?
For the 12 months ended 30 June, Endeavour reported a 3.6% increase in group sales to $12.3 billion. This reflects the benefits of a 53-week financial year, a 4.2% lift in Hotel sales to $2.1 billion, and a 3.4% increase in retail sales to $10.2 billion.
Operating EBIT came in at $1.1 billion, which was up 4.9% vs FY 2023 or 3.4% on a 52-week basis. This excludes $45 million of One Endeavour Technology (OET) program operating expenditures in FY 2024.
Speaking of which, management notes that work has ramped up on the One Endeavour program to separate from Woolworths Group Ltd (ASX: WOW) and establish its own technology infrastructure. Procurement and lease management systems are implemented, with People systems aiming to complete in FY 2025. Store systems will complete design and progress to the implementation phase in the current financial year. After which, it is targeting its ERP design to complete this year, with implementation to begin in FY 2026.
On the bottom line, profit after tax was down 3.2% to $512 million. This reflects an increase in finance costs.
Nevertheless, this didn't stop the Endeavour board from maintaining its full year dividend at 21.8 cents per share. This includes a fully franked 7.5 cents per share final dividend that was declared this morning.
How does this compare to expectations?
According to a note out of Goldman Sachs, it was expecting sales of $12,311 million, EBIT of $1,068 million, and a net profit of $520 million.
This means that the company has delivered a result in line with expectations today for sales and EBIT, but missed with its net profit. This may explain why the Endeavour share price is dropping today.
Management commentary
Endeavour's CEO, Steve Donohue, appeared to be pleased with the results. He said:
Endeavour Group's F24 financial results demonstrate the resilience of our brands and businesses in response to challenging trading conditions, with both our Retail and Hotels segments delivering sales and EBIT growth in a softening consumer environment.
With household budgets under pressure, value-conscious consumers continue to seek out Dan Murphy's for its well-known Lowest Liquor Price Guarantee, expert service and market-leading range. Our My Dan's membership program has enhanced its range of member-exclusive discounts and personalised offers for its 5.4 million active members, delivering a strong 83% scan rate, with members spending 80% more per transaction than non-members.
Outlook
Management revealed that underlying sales momentum in both the Retail and Hotels segments improved slightly through the first seven weeks of FY 2025 compared to the fourth quarter of FY 2024.
However, it notes that the FIFA Women's World Cup and associated social occasions in early FY 2024 limit the comparability between the same periods year on year. Nevertheless, headline sales growth in the first seven weeks has been 0.6% in Retail and 2% in Hotels.
Donohue concludes:
With our brands and venues being Australia's go-to destinations for social occasions and events, we look forward to key upcoming first half trading events such Father's Day, Cyber Week and the festive season, with our unrivalled value proposition, growing loyalty base and compelling consumer offer positioning us to perform well. We will continue to focus on tightly managing our costs as we execute our strategy scorecard commitments to deliver value for shareholders.
