Seven Group Holdings Investor Day presentation highlights strategic growth opportunities supported by privileged assets.

About Seven Group Holdings Limited

Seven Group Holdings Limited (Seven Group, the Group, ASX: ‘SVW’) is a leading Australian diversified operating and investment Group employing 15,000 people across 5 core businesses in the Industrial Services, Energy and Media sectors. The Stokes family own about 53 percent of Seven Group. These businesses and investments include WesTrac, the 100 percent owned sole authorised Caterpillar dealer in WA, NSW and ACT; Coates which is also 100 percent owned and is the largest provider of equipment solutions in Australia and 95 percent of Boral, which is Australia’s largest, integrated construction materials supplier. The Group also owns 30 percent of Beach Energy, a mid-tier energy exploration and production company; and 40 percent of Seven West Media, one of Australia’s largest multi-platform media companies, including Seven Network and The West Australian newspaper.

Market-leading Industrial Services Businesses

Seven Group’s exposure to rising commodity export volumes, which were up 5.1 percent in the year to March 2024, looks set to support consistent earnings growth over the medium term. The Group’s 100 percent owned West Trac business will be a key beneficiary of the $77 billion of committed resource projects across Western Australia and NSW that are forecast to produce 1000 million tonnes of iron ore exports and 210 million tonnes of thermal coal exports per annum by FY29. Additionally, 56 announced or committed critical minerals projects across Western Australia and NSW will support capital equipment sales and future production volumes. Interestingly, West Trac’s revenues are not tied to commodity prices but to commodity volumes, which tend to be less volatile. This explains why West Trac is a highly cash generative business with a 10-year average cash conversion ratio of more than 100 percent. West Trac owns the prized Caterpillar dealership which provides trucks, hydraulic mining shovels, drills, dozers graders and loaders essential to the mining and civil construction industries.

Exposure to Australia’s infrastructure and construction sector through Coates, Boral and West Trac is likely to be a major contributor to Seven Group’s medium-term earnings given the estimated $1.7 trillion 7-year activity pipeline through to FY31. This activity pipeline includes transport and energy transition infrastructure and an estimated 240,000 new homes required annually to achieve government housing targets.

Energy Business Unit

Seven Group owns 30 percent of Beach Energy which supplies about 12 percent of the domestic gas market, which is facing tightening supply with shortfalls expected from FY26. Gas and LNG are critical to support the clean energy transition because gas is ideal to ‘firm-up’ the increasing grid penetration of variable renewable energy generation because it is readily ‘dispatchable’ and can fill the void left by renewables.

Seven Group also owns domestic gas assets in Victoria and has a 15 percent minority stake in the LNG Crux gas field in offshore WA, in conjunction with Shell. The Crux gas field is close to growing Asian demand centres and the first LNG cargo is expected in CY27.

Media Business Unit

Seven West Media reaches 91 percent of Australians and has a monthly total television audience of 17 million viewers, that includes 2 million viewers a day watching 25 hours of news content each month. It is a market leader in television, publishing and digital with a 41 percent share of WA advertising revenue and has operated in Australia since 1956 and is 40 percent owned by Seven Group.

Looking Ahead

Following compulsory acquisition of the remaining 5 percent of Boral it doesn’t currently own, Seven Group Holdings will be in the top 5 of the ASX200 industrials index and in the top 20 ASX by market capitalisation. This will provide Seven Group shareholders with higher liquidity, and investor index buying support that should lift the Group’s share price. Seven Group is likely to reach 100 percent share ownership of Boral by FY24.

Seven Group’s balance sheet is well-managed in that the Group’s balance sheet uses leverage to make acquisitions but generates strong cash flow from those acquisitions to pay down drawn debt. Currently Seven Group’s Adjusted Net Debt / EBITDA currently sits at 1.9 times, with 52 percent of gross debt hedged for 6 years at an average fixed rate of 5.1 percent.

The favourable commodity production outlook underpinning a positive West Trac outlook, resilient infrastructure and construction investment supporting customer activity at Coates and Boral and the strong Group results to date suggest that FY24 Group earnings guidance of mid to high-teen EBIT growth will be comfortably met.