SEVEN GROUP GOES SHOPPING DESPITE A TUMBLE INTO THE RED
CEO RYAN STOKES
KERRY Stokes’ investment vehicle, Seven Group, has tumbled into the red but says it plans to take advantage of the downturn in the resources sector to go shopping.
The company, which has interests in industrial services, media, property and resources investments, posted a $360 million full-year loss on the back of heavy writedowns and restructuring costs in its mining services businesses.
Underlying profit, which strips out “one-offs”, also fell for the year to June – clocking in 19 per cent lower at $203.1 million – and the group has flagged a 10 per cent slide in earnings for the year ahead as weakness in the resources sector continues to bite.
But chief executive Ryan Stokes (pictured) said the company’s free cash flow remained strong and Seven was on the lookout for buy- out opportunities. He said that while the group would “look broadly” across a wide range of industries for acquisition targets, the state of the mining services and oil and gas sectors presented an opportunity to pick up assets and businesses relatively cheaply in those markets.
“We have a business that works through that resources cycle and that gives us an opportunity to look at various other segments and sectors,” he said.
“We’ll keep an eye open for opportunities.”
Mr Stokes also said that while the slowdown in mining investment had hurt equipment sales at its WesTrac Australia business, a major Caterpillar dealer, it would benefit from an ongoing increase in production in the resources sector.
“Too often it is seen as purely equip- ment supply and the support aspect is something that’s integral to our model,” he said.
“It’s certainly something we think can provide strong profits for us and we think it can be a strong basis for the future.”
Seven nonetheless expects product sales from the business to continue to fall over the next year, while its Coates Hire operation is also expected to suffer due to the downturn in mining, though it will receive a boost from increased infrastructure demand in New South Wales.
Meanwhile, the company’s Seven TV network subsidiary expects low single-digit growth in the advertising market and improvements for its magazines and newspaper business.
Seven Group holds 41 per cent of Seven West Media, which owns the broadcaster.
Shares in Seven Group closed 1 higher yesterday at $4.67.
Seven West shares rose half a cent to 82.5 .