Earnings Wrap: Evolution, ASX and Southern Cross miss estimates, Origin profits surge

Evolution: Misses net profit expectations

Evolution (ASX: EVN) reported revenue of $2.23bn , in line with analyst expectations but net profit of $205m was a sizeable miss against expectations of $221m.

Evolution’s CEO and managing director Lawrie Conway said the FY23 results were impacted by several external events, which were partially offset by higher metal prices.

“In FY24, planned lower capital expenditure profile, anticipated lower all-in sustaining cost, and higher production levels will see us move to stronger cash generation,” he said.

“This is underpinned by the move into commercial production of our recent projects at Cowal and Red Lake, and the resumption of normal operations at Ernest Henry.”

The board has declared a fully franked final dividend of 2 cents a share (30 June 2022: 3 cents a share), an estimated aggregate payment to shareholders of $36.7 million.

This is the 21st consecutive dividend paid to shareholders for a total of $1,128 million since 2013.

ASX: Misses expectations as CHESS costs rise

ASX (ASX: ASX) reported FY underlying NPAT of $491.1m, weaker than the $500m expected by analysts.

• Full-year net profit came in at $173.8m, down 38% on last year due to a $173.8m writedown on the failed CHESS replacement project.

• The profit numbers were also driven by lower than expected revenues ($1.01bn versus $1.02bn expected) and higher costs.

• The cost of reviewing the CHESS project saw overall costs rise by 12.3%, to $374.6m.

• EBITDA came in at $672.5m, again missing analyst expectations.

• Final dividend 112.1 cps, fully franked

FY Guidance was reiterated (Jun 2024):

• Capital expenditures A$110-140m vs FactSet A$105.8m

• Total expense growth 12-15%

• Expects that reduced inflationary pressures and growing confidence around the peak for interest rate levels should be positive for cash market trading volumes

CEO Helen Lofthouse described the results as “resilient” given the tough market conditions.

Southern Cross Media: Net profit miss on tough market conditions

Southern Cross (ASX: SXL) posted revenue of $397.2 million for FY23 was in line with the prior year’s figure, which management highlighted as a solid result amid challenging market conditions. This revenue figure was also in line with FactSet’s consensus forecast.

Regional television revenues contracted 14.5% to $107.8 million, driven principally by a reduction of 20.2% in national revenues.

EBITDA figures by segment were mostly in line with FactSet consensus forecasts:

• Audio $80.3 million versus $81.1 million

• Television $18.7 million versus $23.7 million

• Corporate $21.8 million versus -$25.1 million

Group expenses were 2% lower at $428.4 million driven by a reduction of non-revenue related expense of $3.8 million, or 1.3% from “prudent and targeted cost management initiatives across the business”.

“Since December, broadcast media markets have been challenging and this is continuing into the new financial year,” said SCA CEO John Kelly.

“SCA’s portfolio of audio assets has outperformed with better than market growth in metro radio and digital audio. We are well-positioned to benefit from expected improvements in advertising markets in the second half of FY24.”

The company also completed its share buy-back program during the year, at a total cost of $26.8 million, $21.3 million of which was during FY23.

Goodman: Profits Halve as Revaluation Tailwinds Ease

Goodman (ASX: GMG) reported operating profit of $1.78bn, up 17% from last year’s $1.53bn.

• Statutory NPAT came in at $1.56bn, down 54% from last year’s $3.4bn

• Earnings per share came in at 94 cents (up 16%), bang in line with analyst expectations

• Assets under management rose 11%, to $81.08bn

Earnings were driven by project completions, portfolio occupancy of 99%, and property income growth of 4.7%.

Goodman provided the following FY guidance (Jun 2024):

• EPS growth of 9% or $1.02, below analyst expectations of $1.04

• On track to achieve key Group sustainability targets including 306MW of solar PV installed or committed in FY23, taking us to 75% of our 400MW 2025 target

• Forecast distribution for FY24 remains at 30.0 cps

Origin's Turnaround Tops Expectations

Origin Energy (ASX: ORG) reports strong FY2023 performance, marking a significant turnaround from losses, and offers an optimistic outlook for FY24.

• Statutory profit: $1.05bn (compared to a loss of $1.4bn in the prior year)

• Underlying profit: $747m (up $340m from the prior year and well ahead of analyst expectations of $664m)

• Underlying EBITDA: $3.1bn vs. $2.92bn expected by analysts

• Final dividend of 20 cents per share

Management quotes:

• “Operational performance right across Origin was strong this year, with higher earnings contributions from Energy Markets, Integrated Gas, and Octopus Energy in the UK." - CEO Frank Calabria

• “Australia Pacific LNG delivered record revenue and cash distributions to Origin as it benefited from elevated commodity prices, while continuing to meet the gas needs of export customers and as one of the largest suppliers to the east coast domestic market."

Guidance

• Expects Energy Markets Underlying EBITDA between $1.30-1.70bn

• Octopus Energy's growth continues, despite potential EBITDA variations due to retail competition

• LNG trading EBITDA expected to be $40-60m in FY25 and $450-600m in FY26

Telstra: Delivers continued growth

Telstra (ASX: TLS) reports another period of solid growth and positive progress on its T25 strategy. Key financial results include:

• Total income: $23.2bn (+5.4%) vs. $23.4bn expected by analysts

• Reported EBITDA: $7.9bn (+8.4%) in-line with analyst expectations

• Net profit: $2.1bn (+13.1%)

• Capex: $3.6bn vs. $3.55bn expected

• Final dividend of 8 cents per share

Management quotes:

• "Our mobiles business remains central to our growth and continues to perform very strongly. Our infrastructure, international, Consumer and Small Business (C&SB) fixed line and health businesses also grew earnings. At the same time, there are aspects of our Enterprise fixed business that are experiencing headwinds." - CEO Vicki Brady

Outlook:

• Total income: $22.8bn to $24.8bn vs. analyst expectations of $23.98bn

• Underlying EBITDA: $8.2bn to $8.4bn vs. $8.45bn expected

• Capex: $3.6bn to $3.7bn vs. $3.89bn expected

• On track to achieve T25 objectives, focusing on customer experience and investments for sustainable growth.

Super Retail Group: Net profit beat but sales continue to moderate

The owner of the Supercheap Auto, rebel, BCF and Macpac brands delivered normalised net profit of $274m ahead of the $264.5m expected by analysts.

Group managing director and CEO Anthony Heraghty emphasised the revenue growth was driven primarily by “ongoing investment in the store network, through new store openings, refurbishments and the roll-out of new formats.”

The group’s financial performance was also underpinned by the addition of more than a million active club members to our customer loyalty base in the past 12 months,” Heraghty said, with more than 10 million active club members across its loyalty programs, representing 73% of total sales.

The board declared a fully franked final ordinary dividend of 44 cents a share, which is at the upper end of the Group’s dividend payout policy.

It will also pay a fully franked special dividend of 25 cents a share, bringing the aggregate dividend payment in FY23 of 103 cents a share.

Management implemented several cost-saving initiatives in sourcing, supply chain and logistics, and workforce management during the financial year. These initiatives enabled the Group to help offset the impact of the high inflationary environment on wages, electricity and rent,” Heraghty said.

But management also flagged continued inflationary pressures on wages, rents and electricity costs in FY24 are likely to increase its cost of doing business as a percentage of sales.

Domain Group: Revenue miss and profit loss due to DHL sale

The online property portal reported a statutory net profit after tax of $26.1 million for FY23, which reflected writedowns of more than $12 million including the planned divestment of its DHL joint venture.

• Group revenue of $345.7 million was below StreetAccount FactSet’s $363.8 million consensus forecast.

• EBITDA of $108 million was down 13% on the FY2022 figure of $124.8 million.

• Operating costs (including discontinued operations) came in at $251.2M versus guidance of around $255 million.

Domain CEO and managing director, Jason Pellegrino, said: “Throughout the challenging market environment of FY23, Domain’s Marketplace strategy and our talented and hardworking team have served us well.

 “We have maintained our commitment to our long-term business evolution, while responding to market circumstances with appropriate cost initiatives.”

 A dividend of 4 cents a share has been declared, bringing the full year dividend to 6 cents a share, in line with FY22.

• Outlook Pellegrino noted that trading in the first six weeks of FY24 reflects some early recovery in new ‘for sale’ listings in high yielding Sydney and Melbourne markets

• “Although national volumes are being impacted by weakness in Queensland and West Australian markets.”

• Management expects FY24 costs to increase in the mid to high single digits to $237 million versus FY23.

• But it has flagged an expected resumption of EBITDA margin expansion in FY24, supported by improved listings, price increases, alongside new contracts and products.