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Stobart steady as energy and infrastructure arms shine

"Significant progress has been made in the period, illustrating that we are on track to achieve our objectives,” added chief executive Andrew Tinkler.

Southend Airport
The company owns Southend Airport.

Stobart Group Ltd (LON:STOB) said its energy and aviation divisions are traded in line with expectations over the last six months, while its infrastructure arm performed ahead of expectations.

The latter is essentially a portfolio of property investments. A disposal in Speke, on Merseyside, netted proceeds of £37mln and a profit of £11.6mln. The company expects to make further sales in the second half.

The energy division, which transports biomass fuel, expects to supply customers with 1mln tonnes of material at a similar operating margin to this time last year. By 2018 the company expects capacity to have doubled and EBITDA per tonne to be £10.

Currently six new plants are under construction that will take their supplies from Stobart.

As the owner of Southend Airport, management is in advanced discussions to lure on board low cost carriers as it bids to boost passenger numbers to 2.5mln a year at an EBITDA margin of £8 by 2018.

In the six months ended August, the footfall was broadly in line with the same time last year.

Quarterly dividend payments

Stobart said it has now moved to quarterly dividend payments, “reflecting the cash generation of the group and its commitment to drive value for shareholders".

"Significant progress has been made in the period, illustrating that we are on track to achieve our objectives,” added chief executive Andrew Tinkler.

"A particular highlight is the momentum in the energy division, which we are confident will continue during such an important point in its development and we look forward to delivering the expected growth.

“Within Aviation, we are pleased with how the discussions with carriers and operators are progressing and look forward to a positive outcome in the coming period.”

The trading statement also contained an update on the search for a replacement for chief financial Ben Whawell, who has gone to run the energy division. The process is “well advanced”, Stobart said.


About the company

Employing more than 900 people, the company has morphed from being solely a trucking firm, although it does still have a 49% stake of the Eddie Stobart logistics business, the firm behind the iconic lorries.

As outlined above there are three main operations – energy, infrastructure and aviation.

The latter passed on a partnership with Ryanair to boost passenger numbers at Southend Airport earlier this year as it didn’t make commercial sense.

Dividend policy

Disposals from infrastructure and investment portfolios have generated a cash surplus that will allow it to double the dividend via a series of quarterly instalments, starting with 3p next month, or 12p on an annualised basis.

The City broker Stifel reckons there is the capacity to distribute as much as double the figure again in special, one-off payouts.

“They are showing us the money,” Stifel said, reiterating its ‘buy’ advice and 200p a share price target.

The shares, up 46% in the year to date, advanced a further 6% in morning trade to 156p, valuing the business at just shy of £540mln.

Quick facts: Stobart Group Ltd

Price: 46 GBX

LSE:STOB
Market: LSE
Market Cap: £172.34 m
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