Stobart confirms bumper dividend after ESL sale

Infrastructure and support services company Stobart Group posted its interim results for the six months to 31 August on Thursday, reporting a surge in underlying EBITDA to £131.8m, from £20.2m in the same period last year.

The FTSE 250 firm said that figure, however, included £123.9m of profit following the partial disposal of its holding in Eddie Stobart Logistics, which generated £112m in net cash proceeds.

Underlying profit before tax, including the profit on disposal, was £122.2m compared to £16.2m, while profit before tax rose to £111.6m compared to £10.8m.

The company’s revenue almost doubled to £124.6m in the period, compared to £65.3m a year earlier.

Underlying basic earnings per share were 34.98p, up from 4.03p, and the board confirmed a quarterly dividend of 4.5p, up significantly from the 3p paid at the same time in the 2017 financial year.

Net cash stood at £2.9m at period end, swinging from net debt of £120.7m as at 31 August 2016.

“Stobart Group continues to work towards its clear targets for its three growth divisions - energy, aviation, and rail and civil engineering - as well as driving growth in cash generation and returns to our shareholders,” said group chief executive Warwick Brady.

“In the first half of the year, we achieved significant returns, in excess of £120m, from our investment in Eddie Stobart Logistics, in which we still hold a 12.5% investment.

“The sale and leaseback of eight ATR aircraft also generated significant cash, allowing us to further increase our quarterly dividends to 4.5p per share.”

On the operational front, the board said Stobart Aviation saw “good progress”, with passenger numbers growing 25% year-on-year to 610,492 through London Southend Airport.

Stobart Energy experienced delays in the commissioning of its new third-party biomass power stations, which impacted short-term volumes by 33%, although EBITDA per tonne was ahead of target and long-term volume unaffected.

The board said Stobart Rail and Civil Engineering was on track to deliver target EBITDA on rail and non-rail civil engineering projects, against a reduction in external revenue.

Stobart Infrastructure and Stobart Investments benefited from “significant uplift” in value of more than £120m, and cash generation of £112m following the partial disposal of the investment in ESL, in which the group retained a 12.5% stake.

“Passenger numbers at London Southend Airport and our regional airline are up year-on-year as we continue to invest across the sector to meet the demands for increased capacity and improved customer experience,” Warwick Brady added.

“We are exploring ways to further develop this portfolio across our airport and airline asset base.”

Brady noted that the energy business improved EBITDA per tonne, despite experiencing delays by its partners in commissioning new power stations.

“This has caused some volatility and impacted short-term performance, with no impact on the duration of our long-term contracts which begin post commissioning.”