Earnings Wrap: Adbri skips dividend, MinRes beats estimates, Zip upgrades outlook

Zip (ASX: ZIP): A turnaround is taking place

One liner: Double miss on FY23 earning and revenue expectations but margins beginning to expand, bad debts lower and upgraded medium-term targets.

• Revenue of $693.2m, up 1671% but below analyst expectations of $724m

• Transaction volume of $8.9bn, up 7%

• Group net bad debts of 2.0% of TTV, down from 2.7% in FY22

• Net transaction margin of 2.8%, up fro, 2.5% in FY22

• Net loss of $401m reflecting the sale of entities such as Spotii, Twisto and Payflex

“In the last 12 months, Zip has delivered strongly against our updated strategy. The strength of our FY23 results was driven by record transaction volumes and revenue, and improved credit losses and margins as well as cost reductions and capital management initiatives," said CEO Cynthia Scott.

Outlook

Zip upgraded its medium-term targets (as a percentage of total transaction volume) including:

• Revenue to 8.0-9.0% from 7.0-7.5%

• Cash cost of sales to 5.0-6.0% from 4.0-4.5%

• Cash net transaction margin to 3.0-4.0% from 2.5-3.0%

• Opex to 2.0-3.0% from 1.5-2.5%

• Cash EBITDA at 1.0-2.0% (unchanged)

Lynas (ASX: LYC): Weak results plus capex revisions

One liner: Double miss on FY23 revenue and earnings expectations, Kalgoorlie capex revised upwards from $575m in February to $730m.

• Revenue of $739.3m, down 19.6% and below the $781m expected by analysts

• Total rare earth oxide production of 16,780 tonnes, up 5.0%

• Average rare earth oxide selling price (kg) of $46.2, down 23.4%

• Net profit of $310.7m, down 42.5% vs. $323m expected

• Cash and cash equivalents of $965.5m from $1.0bn a year ago

“FY23 was another very productive year for Lynas. Operational performance was particularly strong with record concentrate production and record NdPr production achieved in the 2nd half," said CEO Amanda Lacaze.

Outlook

• Kalgoorlie capex revision "can be covered from the existing cash balance"

• Kalgoorlie developing working through one major area which remains under final construction in the first quarter of FY24

• Malaysia Plant operating licence was renewed in February 2023, subject to conditions prohibiting the import and processing of Mt Weld lanthanide concentrate from 30 June 2023

• Currently progressing judicial review of licence conditions

MinRes (ASX: MIN): Slight beat, dividends up 90%

One liner: Slight double beat on analyst expectations for revenue and earnings, record lithium volumes boosts top and bottom line.

• Revenue of $4.78 billion in FY23 was up 40% on last year and ahead of consensus of $4.72 billion

• EBITDA of $1.75bn, up 71% and in-line with consensus $1.74bn

• Fully franked final dividend of $0.70, bringing the FY23 total dividend to $1.90, a 90% increase on last year’s dividend

MinRes managing director Chris Ellison highlighted the role record lithium earnings and strong iron ore earnings played in the result, but called out the “operational challenges” faced in the second half.

In particular, he said statutory NPAT of $244 millon was knocked by non-cash impairment charges linked to its Yilgarn and Utah Point iron ore assets.

“These operations continue to play a part in our transition to a lower-cost, longer-life iron ore portfolio. We are investing in exploration to maximise the value potential,” he said.He also alluded to further capex required for its energy division, “but the significant capital investment required to maximise this potential is being held back by the current WA domestic gas policy.”

Outlook

• Little guidance was provided for FY24, but Ellison called out the mining services division as “the heart of our business”

• “The division will benefit from the ramp up of activities across our operations and the deployment of its world-leading innovations."

Adbri (ASX: ABC): Earnings higher but holds back dividend

One liner: Revenue beat, net profits in-line but dividend withheld due to "capital requirements for the Kwinana Upgrade and elevated leverage." (Note: Adbri is reporting for the first-half of 2023)

• Revenue of $926.4m, up 14% and above $886m consensus

• Underlying EBITDA of $149.1m, up 20.9%

• Net profit of $52.1m, up 12.8% vs. $52.5m consensus

Despite the revenue and profit increase, the company won’t be paying in interim dividend, with CEO Mark Irwin saying that the company expects a softer second half. The company also wants to conserve capital for the upgrade of its plant in WA.

Full year outlook:

• Capital expenditures $330.0-350.0m

• Expect demand for products to remain strong throughout H2 with trading conditions similar to H1, notwithstanding a slight softening in residential and retail sectors

The Star Entertainment Group (ASX: SGR)

One liner: Revenue miss but normalised profit beat for FY23, underlying performance beginning to stabilise in FY24, statutory losses widen on impairments.

• Revenue of $1.87bn, up 23% but lower than consensus $1.91bn

• Normalised NPAT of $41.3m, up 224% and above consensus $23.5m

• Statutory net loss of $2.44bn vs. $202m loss a year ago

• Significant items of $2.82bn primarily include non-cash impairment of The Star Sydney, The Star Gold Coast and Treasury ($2.17bn), ongoing regulatory and legal costs ($595m),  debt restructuring costs ($54m) and redundancy costs ($16m)

Group MD and CEO Robbie Cooke: "Remediation is our number one priority. We have commenced the uplift in our risk management, safer gambling and AML capability ... We are improving our financial crime management and our overall approach to harm minimisation. Our remediation program will track and hold us accountable to the multi-year program we are committed to delivering."

• “In terms of trading performance our statutory EBITDA for FY23 was $317 million, up 34% on the prior year, and slightly above the top end of the previously announced guidance range. Our statutory net loss was $2.4 billion. The resolution of the NSW casino duty proposed increase has removed significant uncertainty in relation to FY24 and beyond for our Sydney operation and has protected the jobs of thousands of NSW team members.”

YTD Trading Update (1 July to 22 August):

• Group: revenue (-20%) on pcp, +3% vs Q4

Outlook:

• FY24 capex $100-120m

• Adjudication claim from Multiplex served on Destination Queensland Consortium lodged by Multiplex with the Queensland Building and Construction Commission under the Building Industry Fairness (Security of Payment) Act 2017 (Qld). Claim is is separate to Supreme Court proceedings

Johns Lyng (ASX: JLG): Books record result in FY23

One liner: Beat both revenue and earnings expectations for FY23, "well placed for another strong year in FY24."

• Revenue $1.28bn, up 43.2% vs guidance $1.25bn and consensus of $1.24bn

• EBITDA of $119.4 million, up 42.9% vs. guidance $115.9 million and consensus estimates of $118.9 million.

• NPAT A$65.4 million, up 42%

• Final fully franked dividend of 4.5 cents a share, lifting the full year dividend to 9 cents, representing approximately 52% of NPAT

Management highlighted the firm’s core division of Insurance building and restoration services, where revenue increased 43.2% to $1,28 billion and EBITDA increased 42.9% to $119.4 million from FY22. IB&RS contributed revenue of $1.14 billion and EBITDA of $136.8 million (an increase of 52.6% and 61.2% respectively on FY22).

“Our reported and forecast earnings are defensive and resilient and we have confidence that they will continue to grow. Testament to our growth and value of the business today, JLG was admitted to the ASX 200 during the period,” said group CEO, Scott Didier AM.

Outlook

• Group Chief Financial Officer, Matthew Lunn noted the firm’s strong position underpinned potential “further opportunities for bolt-on and strategic M&A”.

• The firm’s solid business-as-usual job registration pipeline continues to support the strength of its activities, with forecast revenue growth of 18.5% in FY24 FY24 sales revenue: $1.17bn

• FY24 EBITDA of $128m, includes BaU EBITDA of $113 million (20.1% increase vs. FY23)

Meridian Energy (ASX: MEZ)

One liner: FY23 underlying NPAT of NZ$315M, up 35% on pcp, driven by higher customer sales, higher generation volumes and positive wholesale trading results.

• EBITDAF up 10% to NZ$783m

• Statutory NPAT of NZ$95m down on FY22 NZ$644m which included gain on sale on Meridian’s Australian business and positive non-cash movements in the value of hedge instruments

• Final ordinary dividend of NZ 11.90 cps, bringing total ordinary dividends declared for FY23 of NZ 17.90 cps, up 3% on pcp

Chief Executive Neal Barclay: "I’m particularly proud that Meridian is leading the market in being the first New Zealand company to progress a grid-scale battery construction in this country, which will add significantly more flexibility to the electricity system in the form of energy storage."

"We have also secured credible and committed partners to advance the Southern Green Hydrogen project. We see this as a potential game changer as it will support Aotearoa's drive to energy independence by providing significant demand response and an energy source for hard to abate processes."

No guidance or outlook