Earnings Wrap: Pilbara Minerals FY23 jump 329%, Wesfarmers beats estimates and raises dividend

Pilbara Minerals (ASX: PLS): Ticking the boxes

One liner: No surprises. FY23 and guidance mostly in-line with consensus expectations.

• Production up 64% to 620.1kt

• Realised prices up 87% to US$4,447 a tonne

• Revenue up 242% to $4.06bn vs. the $4.08bn expected by analysts

• Underlying profit after tax up 329% to $2.28bn vs. $2.28bn expected

• Final dividend of 14 cents per share

FY24 guidance

• Production guidance between 660-690kt spodumene concentrate vs. Goldman Sachs expectations of 680kt

• Operating costs of $600-670 dmt

• Growth capex between $490-540m

Michael Hill International (ASX: MHJ): In-line with guidance but well-below analyst expectations

One liner: Challenging consumer sentiment but comparable EBIT and margins lower, discontinues buyback, looks to new brand, store expansion and Christmas promotion for FY24

• Revenue $629.6m vs guidance $628.1m and at the lower end of the consensus

• Statutory NPAT $35.2m, down 25% on FY22 $46.7m

• Final DPS 3.5c, record 8-Sep, payable 22-Sep

MD and CEO Daniel Bracken, ‘Trading in the second half proved to be much harder, with economic headwinds impacting consumer confidence and in turn sales. Considering impacts we have experienced on input costs across both diamond and gold pricing, our gross margins held up well.’

Buyback

• Directors have decided to discontinue existing buy-back

• Under the buy-back, the company acquired 8.6M shares, being 2.2% of the company's shares on issue at the commencement of the buy-back, at a total cash cost of $10.2M

Trading Update (first 7 weeks of FY24):

• Group sales +1.2% year-on-year

• For the core Michael Hill brand, sales have continued the recent trend and are down on the record start to FY23

• MD and CEO Daniel Bracken, ‘The Michael Hill brand demonstrates its strength and resilience with a focus on the key milestone moments in the lives of our customers. Couple this with the launch of our new TenSevenSeven brand, the Bevilles store expansion, and exciting product innovation for Christmas, the Group is well-positioned for the year ahead.’

Wesfarmers (ASX: WES): Profit up 5%, hands back more cash to shareholders

One liner: Wesfarmers has grown its net profit from a year ago, beat on revenue and EBIT versus expectations, and increased its dividend.

• Revenue up 18.2% to $43.55bn vs expectations of $42.95bn

• Net profit after tax up 4.8% to $2.47bn vs. $2.40bn expected

• Fully-franked ordinary final dividend of 103 cps, taking the full-year ordinary dividend to 191 cps, up 6.1% year-on-year

CEO Rob Scott pointed to the strength of the groups operating model and portfolio quality as the drivers of the results, noting that the Group’s largest divisions performed well over the past 12 months and delivered a solid blend of resilience and growth.

Outlook:

• For the first seven weeks of the 2024 financial year, sales growth for Kmart Group has continued to benefit from strong trading results in Kmart, but growth has moderated from H2 of the 2023 financial year

• Sales growth in Bunnings remained in line with H2 of the 2023 financial year, with growth in both consumer and commercial segments for the year to date

• Officeworks' sales for the first seven weeks were in line with the prior year

• The performance of the group's industrial businesses remains subject to international commodity prices, foreign exchange rates, competitive factors and seasonal outcomes

• Earnings from WesCEF's existing operating businesses are expected to decline significantly in the 2024 financial year, primarily as a result of lower ammonia prices and higher input gas costs

Ardent Leisure (ASX: ALG) Revenue turnaround, $480m share buyback

One liner: Statutory loss but revenue jumps 70% (in-line with analyst expectations), announces buyback of up to 10% of shares to run for 12 months from 18 September.

• Group revenue up 70% to $83.9 million in FY23 and in line with analysts’ forecast of $83.8 million.

• Group’s EBITDA loss from continuing operations of $4.8 million improved significantly compared to the EBITDA loss of $55.4 million reported in the prior year.

• NPAT consensus was $14.1 million

Management emphasised This year’s revenue was the highest since FY16 – despite international visits remaining well below historical levels.It also said current and prior year EBITDA results were impacted by several significant one-off items.

These include Dreamworld incident related costs – where a $4 million settlement was reached in the shareholder class action – and associated insurance recoveries and other non-recurring and non-cash items.

“The Theme Parks & Attractions business has delivered positive revenue and attendance growth since the second half of FY22, and this trend has continued through FY23. Although the second half of the year has seen some economic challenges emerge, the business nevertheless achieved a 30% increase in revenue in 2H23 despite the business also cycling an unimpeded 2H22.

Outlook

• Management noted ongoing tough economic conditions in FY24 will likely see “near-term moderation in growth but expects to see “more meaningful improvements as it delivers its recently announced pipeline of attractions to help drive visitations.”

• The Board will continue to review options for further capital management initiatives for remaining cash (including the potential receipt of its share of contingent consideration from the sale of Main Event amounting to approximately US$8.8 million),” Management said.