Earnings Wrap: Transurban names new CEO, Vicinity tops guidance, Mirvac posts $165m net loss

TCL beats consensus, names new CEO

Transurban (ASX: TCL) declared a full-year proportional EBITDA of $2.45bn ahead of expectations of $2.42bn as well as a net profit of $92 million.

• Free cash flow came in at $1.73bn, ahead of expectations of $1.65bn

• Final distribution of 31.5 cps

• Full-year dividend of 58 cps, up 41.5%

The company also provided the following guidance for FY24:

• FY23 record traffic and EBITDA provides solid base for continued growth in FY24

• Some further benefits of FY23 inflation will continue to flow through FY24 revenue and will compound over time

• FY24 distribution likely to include WestConnex cash previously held during construction. Expected to contribute ~3-4 cps

Finally, the company also announced a new CEO, with current CFO Michell Jabklo to succeed Scott Charlton.

Ms Jablko joined Transurban in early 2021 after  a stint at ANZ where she was also CFO. It’s a strong appointment, particularly given TCL will need to refinance more than $2B in debt over the next couple of years, after taking advantage of low rates to build more roads.

Bapcor books record $2bn revenue despite headwinds

Bapcor (ASX: BAP) reported $125.3 million in net profit after tax, in-line with its guidance.

Operating margins lifted across all the group’s trade and wholesale segments in the second-half of FY2023 versus the first-half – though its retail division faced some headwinds.

The group’s focus on capital efficiency during FY2023 was called out by Bapcor’s Managing Director and CEO Noel Meehan. Part of the firm’s business transformation program, it drove “a significant reduction in 2H23 inventory levels and improved cash generation,” Meehan said.

“These actions helped to mitigate some of the profitability headwinds due to temporary margin compression from cost inflation, the investment in capability, depreciation and amortisation costs and higher interest; as well as a generally more challenging environment in the Retail market,” he said.

• EBITDA up 2.4% to $298.6m

• Earnings per share fell 4.8% to 36.9 cps

• A fully-franked dividend of 11.5 cents a share was declared

• Full-year dividend to 22 cents – in line with Bapcor’s 59.6% payout ratio

• Bapcor ended FY23 with a stronger balance sheet, an improved leverage ratio of 1.12 times, and net debt decreasing to $251.7 million.

Outlook

• Expects solid underlying performance

• Solid demand in Trade segment to continue, but with market growth rate to return to more normalised longer-term levels

• Specialist Wholesale segment to benefit from growth and consolidation opportunities in the Truck market

• Retail segment to face ongoing challenging market conditions

Mirvac to pivot out of office exposure

Property developer Mirvac (ASX: MGR) posted a full-year result that was largely in-line with analyst expectations and raised its full-year dividend to 10.5 cents per share, up 3% compared to a year ago. The figures below refer to Macquarie expectations.

• EBIT fell 1% to $767m vs. $774m expected

• Statutory loss of $165m due to $528m in property revaluation losses

• Operating earnings per share down 3% to 14.7 cps vs. 14.8 cps expected

• Full-year dividend up 3% to 10.5 cps vs. 10.0 cps expected

“We also delivered slightly above our revised residential lot settlement guidance, and continued to see good sales momentum as the medium-term outlook improves, particularly for our apartments projects as they reach final stages of completion," said CEO Campbell Hanan.

Outlook

• Guided to operating earnings between 14.0 to 14.3 cps (vs. 14.1 cps expected)

• Distributions of 10.5 cps (vs. 9.6 cps expected)

• Plans to increase exposure to industrial and living sectors over the short-to-medium term

• Moderate office exposure

• "We will continue to sell down non-core assets to optimise capital allocation across our portfolio and focus on unlocking the considerable value from our development pipeline over the next few years."

Endeavour Group reports growth in profit, sales and earnings in FY23

Endeavour Group (ASX: EDV) reported $529 million in net profit after tax for FY2023, up 6.9% year-on-year.

Group EBIT and sales were also up by 10.7% and 2.5% to $1.02 billion and $11.9 billion, respectively.

“Retail sales momentum is returning after a period of rebalancing post-pandemic, with full year sales of $9.9 billion,” said Endeavour Group CEO, Steve Donohue.

He noted the first half still showed the “cycling” of elevated pandemic performance, when the group registered a 3.7% sales decline.

“But the second half saw a return to growth with a 0.7% increase in sales. Over the last four years, our retail business has achieved a compounded annual growth rate of 4.0%,” Donohue said.

“Pleasingly, sales growth has continued in the first six weeks of FY24 trading with an uplift of 2.5%.

”Donohue emphasised this was the first full period of unrestricted trading across its hotels and other live venues since 2019, a division that saw sales grow 31% to $2 billion in FY2023 and a 35.9% rise in EBIT.

He also pointed to the group’s cost-out focus, having removed $90 million of costs since it was demerged from Woolworths, $60 million of which were trimmed in FY2023.The board declared a full-year dividend of 21.8 cents a share, up 7.9% on FY2022.

Vicinity Centres hits top end of guidance

Vicinity Centres (ASX: VCX) reported $271.5 million in statutory net profits for FY23, down from $1.2 billion a year earlier, largely on the back of asset sales.

The name behind major retail brands such as Melbourne’s Chadstone shopping centre and Sydney’s Queen Victoria Building, Vicinity divested half of its interest in Broadmeadows Central during the year.

Retail sales across its portfolio of centres climbed 8% in the second-half of FY2023, despite growth rates moderating in the final quarter of the financial year.

Management reported that funds from operations increased 14.5% during the year, largely driven by a 12.1% increase in net property income to $900 million, which is now back to pre-COVID levels.

Net property income growth was driven by:

• Improved cash collections from current and prior years

• Positive rental growth

• Percentage rent uplift

• Continued ancillary income growth, led by carparks and media sales, and

• Higher occupancy.

Vicinity’s CEO and managing director, Peter Huddle, said the group had in FY2023 focused on executing swiftly at times when the retail sector was favourable.

“We delivered a significant level of high-quality leasing outcomes, focused on enhancing the retail mix of each centre and reducing our income at risk, while simultaneously negotiating favourable leasing spreads which support current and future NPI growth,” Huddle said.

The Board declared a final distribution per security of 6.25 cents, bringing the total FY23 distribution to 12 cents (FY22: 10.4 cents). This represents a payout ratio of 94.9%.