Endeavour posts better-than-expected earnings; shares tumble from all-time highs

Things were going oh-so well for Endeavour Group (ASX: EDV), marking fresh all-time highs last Tuesday, Wednesday and Thursday.

Endeavour shares tumbled -8.95% in early trade despite its FY22 earnings coming ahead of analyst expectations.

Results at a glance:

Source: Endeavour Group | Table: Market Index

Earnings beat

The $495m net profit figure was ahead of Bloomberg estimates of $489.5m

"Our Retail segment had an exceptional first half, and our Hotels segment came back strongly in the second half," said CEO Steve Donohue.

Retail EBIT (72% of Group EBIT) was flat year-on-year, with margins supported by drink premiumisation, higher margin new products and demand for Pinnacle Drinks products. This was partially offset by inflation and cost challenges arising from covid and east coast flooding.

Hotels EBIT rose 20.7% year-on-year as business conditions starting to inch towards pre-covid levels. Endeavour said FY22 was still below "normal" due to covid impacts during the first four months of FY22. Sales were up 6.6% compared to FY21 but -7.9% below FY19.

Cautious guidance

Endeavour was unable to issue a specific guidance but provided an update for the first seven weeks of FY23.

"Compared to the same period in FY20, which was before COVID-19 impacts, Retail Sales were up 12.7% and Hotels 13.4%. Sales comparisons to last year are not meaningful given the COVID-19 restrictions in place at the time," said Endeavour.

Still, the company's commentary was rather cautious, noting a "variety of factors which may impact performance in the year ahead including inflation, limited team availability and the potential for supply chain disruption."

In FY23, Morgans expects Group revenue to rise 1.6% to $11.78bn and profits to grow 7.5% to $532m. Morgans considers its FY23 earnings forecasts to be slightly below consensus expectations.

Endeavour share price chart