Endeavour Group FY24 Earnings Call Highlights

Endeavour Group (ASX: EDV) shares dipped more than 6% on Monday after its FY24 profit figures missed analyst expectations. The Dan Murphy's and BWS owner also hinted at a softer start to the new year amid increasingly value-conscious consumers.

FY24 Earnings Summary

• Group sales up 3.6% to $12.3bn

• Group EBIT up 3.1% to $1.1bn

• Group NPAT down 3.2% to $512m

• EPS down 3.1% to 28.6 cents per share

• Total FY24 dividend unchanged at 21.8 cents per share

• Outlook: "Underlying sales momentum in both the Retail and Hotels segments improved slightly through the first seven weeks of trading compared with Q4."

The sales and dividend was in-line with Goldman Sachs estimates (as of 6-May) but net profit missed by 1.5% ($520m forecast).

Earnings Call Highlights

The below topics have all been answered by CEO Marnie A. Barker and CFO Andrew Robert Morgan.

FY24 results: "We delivered record EBIT in an inflationary environment, driven by gross profit margin expansion and cost optimization."

Margin expansion: "Our focus on gross margin management has seen continued margin expansion in both retail and hotels."

Market trends (liquor): "Our focus on the customer is driving strong outcomes and performance, with Dan Murphy's and BWS delivering value and convenience. Pinnacle Drinks remains a key driver of retail sales and product innovation for the group."

Market trends (accommodation and gaming): "We delivered record sales in hotels, with growth in food, beverage, gaming, and accommodation, supported by optimisation of our gaming fleet and better sourcing and menu optimization."

On inflation: "Inflation was a material headwind during the year, with award wage increases of over 6% as a notable example. Mitigating this, we continue to deliver sustainable cost savings benefiting supply chain costs in gross profit and multiple areas of cost of doing business."

Consumer focus: "When customers are feeling the pinch, Dan Murphy's steps up, helping customers stretch every dollar further, never compromising on service and range."

Price leadership: "Dan Murphy's price leadership increased to a record level in FY24, with our value perception now 26 points ahead of the nearest competitor."

Pricing activity: "Our focus on offering the best prices across both retail and hotels continues to attract an increasingly value-conscious consumer."

Technology investments: "We're making progress on our One Endeavour program to separate from Woolworths and simplify our technology landscape."

Analyst Q&A Highlights

On earnings outlook: "We don't think of our category as a discretionary one ... We feel quietly confident, but we're very conscious of a tough market."

Volume growth: "We're seeing real resilience in transactions. And that's a confidence booster for us."

On market share: "We're very confident that we grew market share every month through the last financial year, and we can see that continuing."

Leveraging Dan's brand: "When you think about a Pub when you think about the number of screens that are in Pubs, the number of places that customers engage with all forms of information sharing alongside Pub Plus there is going to be a huge opportunity in the future there."

AI-driven price and promotion optimisation: “In the half, the half of the upside [regarding gross profit margin] was generated out of AI. And we're seeing that benefit become even greater as time goes by.”

Hotel's second half softness: “Hotel sales were a bit tougher in the second half. So you've got that sort of downward pressure through the rest of the cost lines, no doubt about it.”

Drinks trends, Dan Murphy's vs. BWS: “BWS has led the way. And Dan says, picked up the pace, as I said in that second half as we saw the market start to soften off a little bit.”

This article was generated with the support of AI and reviewed by an editor.