Stobart Group Ltd (LON:STOB) saw profits jump by more than 650% in the first half of its financial year, largely thanks to the partial disposal of its stake in Eddie Stobart Logistics PLC (LON:ESL).
The infrastructure and support services group sold a stake in the recently-floated haulier back in the spring, netting a tidy profit of £123.9mln.
READ: Boss confident in hitting "ambitious" long-term targets
It still retains a 12.5% stake in ESL which is worth around £70mln based on the current share price.
Group underlying profits totalled £122.2mln (H1 16/17: £16.2mln) in the six months ended August 31 on revenues which almost doubled to £124.6mln (H1 16/17: £65.3mln).
As a result of the strong performance, Stobart has hiked its dividend by 50% to 4.5p.
The company is more than just its holding in ESL though and has three main divisions: aviation, energy and rail& civil engineering.
Fourth easyJet plane confirmed
Stobart Aviation owns London Southend Airport where passengers numbers grew 25% year-on-year in the half to 610,492.
Stobart wants 5mln passengers using the airport each year by 2022 and is looking to increase the number of airlines using the airport, although the company said recently that airlines need between six and 18 months to plan new operations.
The more immediate target in this division is to get to 2.5mln passengers by the end of next year, which has moved closer to realisation with a fourth easyJet PLC (LON:EZJ) aircraft set to be based at Southend from next year, adding another 270,000 passengers or so.
Flybe Group PLC (LON:FLYB) will also add a fourth and fifth over the coming nine months or so, boosting numbers by a further 250,000 per annum.
Margins up in Energy division
Stobart also owns the Stobart Air regional airline which operates under the Aer Lingus franchise. The carrier enjoyed a “strong summer” and is trading ahead of expectations.
Away from its airport, Stobart also supplies biomass to power plants across the UK. Underlying earnings (EBITDA) per tonne of biomass delivered was £1.57 higher than the prior year at £12.01, although total tonnes sold fell to 382,775 (H1 16/17: 469,259 tonnes) due to longer than expected commissioning periods at some new plants as well as a large customer that went into administration.
Stobart said it “remains very confident” in the division’s medium and long-term prospects but did acknowledge the short-term challenges.
Network Rail delays offset
In its rail & civil engineering division, Stobart managed to offset scale backs by Network Rail by increasing internal work, with improvement work being carried out at London Southend Airport and at some of the energy business’ processing sites.
In total, revenues in this division came in at £20.2mln compared to £23.9mln a year earlier, although underlying earnings (EBITDA) was ahead at £1.4mln (H1 16/17: £1.0mln).
Focus on those three growth divisions
"Stobart Group continues to work towards its clear targets for its three growth divisions - Energy, Aviation and Rail & Civil Engineering - as well as driving growth in cash generation and returns to our shareholders,” said 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.
"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. We are exploring ways to further develop this portfolio across our airport and airline asset base.”
He added: "Our Energy business has improved EBITDA per tonne, despite experiencing delays by our 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."
Shares edged 0.2% higher to 274.1p at the opening bell on Thursday.
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