Endeavour's profits grow by 11 per cent

Endeavour’s profits increased by 11.2 per cent for FY22 to $495 million in its first year as an independently listed company.

Revenue was flat at $11.6b and EBIT rose 2.8 per cent to $924 million and gross profit margin lifted slightly to 23.2 per cent (FY21: 22.4%), underpinned by premiumisation, higher margin new products, demand for Pinnacle Drinks products, as well as a lower level of promotional activity in the market.

The first half of FY22 accounted for the stronger retail performance given that Sydney and Melbourne were both in lockdown and this led to greater online ordering via BWS and Dan Murphy's. Online sales were up by 17 per cent to $1 billion with online penetration now sitting at 10 per cent for the group.

Total retail sales were $10.1 billion, only slightly less than in FY 21.

Both Mr Gannon and Mr Dononhue said that the first seven weeks of this financial year show strong growth and that they "expect hotels to continue to perform strongly in FY23", even as team shortages continue to challenge operations.

As lockdowns lifted and mobility increased in the second half, the performance of Endeavour's hotels started to grow, leading to total sales for the year at $1.5 billion, up from $1.4b in in FY21. The FY22 results represent 231 trading days when all hotels were open (vs 195 days in FY21).

Hotels and retail performance is up 13 per cent for the first seven weeks.

However, Mr Dononhue said, "COVID-19 led to elevated retail sales levels which continue to moderate and we expect this to return to normal in FY23."

In the past financial year, Endeavour has acquired five new hotels - the Terrey Hills Tavern (NSW), The Manly Hotel (QLD), the Commercial Hotel (QLD), The Empire Hotel (SA) and The Grand Tasman Hotel (SA) and completed 40 new renewals. The total Hotels portfolio consisted of 344 hotels (including five managed clubs) at the end of the period.

It has opened 32 new stores: seven Dan Murphy's and 25 BWS stores and completed 81 store renewals. There is now a network of 258 Dan Murphy's stores and 1417 BWS Stores in the network.

Endeavour Group Managing Director and CEO, Steve Donohue, said:

“These achievements were delivered against a backdrop of ongoing impacts from COVID-19, severe weather events, team shortages and a range of supply chain disruptions. Notwithstanding these challenges, the commitment and passion of our team enabled these positive financial outcomes…

“Australians are returning to socialising in hospitality settings, and the trend towards discovering new drinks is continuing. While we anticipate that the operating environment will remain challenging, I’m confident our team of exceptional people, our customer-focused strategy, and our disciplined approach to financial management will enable us to continue to deliver for our customers, partners, team members and shareholders.”

Endeavour continues to see strong growth in Spirits and Premix, particularly seltzer with these categories growing by more than 40 per cent over the last three years and low and zero alcohol products accounting for five of the top ten fastest growing sub-categories.

Endeavour’s loyalty networks continue to grow. My Dan’s membership program now boasts 4.5 million active members and the BWS App has 260K users per month. Over 330 Endeavour hotels now use ‘order and pay at table’ technology (via me&u) and have executed over 3.7 million transactions using this technology, creating a better way of understanding its consumers as well as a new stream of data research for the group.

Paragron Wines acquired Josef Chromy Wines, Shingleback Wines (finalised just two weeks ago) and Pinnacle Drinks launched 279 new products this year with 70 per cent of Endeavour customers purchasing products from the Pinnacle portfolio this year.

Shareholders will receive a dividend of 7.7 cents per share.