The diversified media, mining equipment and energy group, is shifting millions of dollars worth of equipment in its Coates Hire business out of Western Australia to take advantage of construction activity in NSW.
Seven Group chief executive Ryan Stokes, who reported a full-year profit of $196.8 million, said Coates had been a “pretty big focus” over the past 12 months for a company that in recent years had been hurt by the mining downturn.
“Part of the restructure activity has been the relocation of fleet from west to east,” he said.
Coates redeployed $50 million of equipment from WA to the eastern states, reduced its fleet by $268 million, closed 14 branches and axed 200 full time employees over the 12 months.
“Now, we’re in a dynamic where the east coast has got a lot of activity around infrastructure,” the chief executive told analysts.
The focus for Coates will be on price and revenue opportunities, but it will still be hurt by “sustained weakness” in mining infrastructure markets, particularly in WA, Mr Stokes said.
Seven Group is also looking to benefit from the burgeoning east coast gas market after this year increasing its stake in Beach Energy to 22.9 per cent.
Things don’t look so good for its media holdings, however, after Seven West Media – which is 41 per cent owned by Seven Group – this week said 2016/17 earnings will drop by as much as 20 per cent due to softer market conditions and increased content costs from the Olympics and AFL.
Seven Group’s total net profit for the year to June 30 was $196.8 million, compared to a $360.3 million loss in 2014/15, when it was hurt by writedowns and restructuring costs in its mining services businesses.
SEVEN GROUP RETURNS TO PROFITABILITY
- Net profit of $196.8m vs $360.3m loss
- Revenue up 2.1pct to $2.84b
- Final dividend unchanged at 20 cents, fully franked