Kerry Stokes’ media business Seven West barely earned enough last year to buy a decent harbourside mansion in Sydney or one of Melbourne’s better addresses, but that’s not why the billionaire’s wealth dropped around a billion dollars on Tuesday morning.
It has been a long time since Seven West had any material sway on the family fortunes despite owning the best known brand in the Stokes empire: Seven Network.
The recent Boral acquisition has been a stellar performer for SGH CEO Ryan Stokes. Credit: Dominic Lorrimer
Seven West’s paltry full-year net profit $16.6 million is a rounding error on the earnings of its parent group – the $21 billion industrial conglomerate Seven Group Holdings (SGH) – which reported a 9 per cent jump in its profit (before significant items) of $924 million.
It’s not a bad result given SGH’s overall revenue was essentially flat due to some parts of the business, like its equipment rental company Coates, having a tough time in states such as Victoria and South Australia.
The near 10 per cent plunge in SGH’s share price on the back of the results merely reflected the market shock that this industrial behemoth would not continue to deliver something close to double-digit earnings growth for the current financial year. The media business, Seven West, reported a 64 per cent dive in earnings by comparison.
Kerry Stokes and his son, SGH chief executive Ryan Stokes, can probably take solace in the fact that SGH’s share price has been on a tear over the past couple of years (from $21 in December 2022 to $47 on Tuesday).
SGH’s media business, much like the owner of this masthead, Nine Entertainment, is battling in the digital advertising universe where global platforms such as Meta and Google dominate.
But the conglomerate can fall back on steady growth from the two sectors that have proven to be recession-proof over the past decade – state and federal governments with their infrastructure spending, and the big miners spending billions building and maintaining their mining infrastructure using SGH businesses such as WesTrac (which is a major dealer of Caterpillar equipment)
Another interesting point is SGH’s massive $1.95 billion in operating cashflow which has helped get debt back to a level where it can contemplate another acquisition – such as its wildly successful takeover of Boral.
