The aviation division saw a 37% increase in passenger numbers at its London Southend Airport in the first half while the energy arm posted a 72% jump in tonnes supplied over the period.
Stobart said the operational progress seen in the first half has continued into the second half, leading the group to identify an increasing number of potential projects with “attractive” forecast returns on capital.
The company expects commercial agreements with Ryanair, easyJet and other airline partners to result in a “significant” rise in passenger numbers at London Southend Airport next year. It is targeting 5mln passengers from 2022 at £10 in earnings (EBITDA) per passenger.
For Stobart Energy, the firm said there are a number of investment opportunities being evaluated including building, owning and operating renewable energy plants that will generate “long-term, sustainable operating cash flows”.
Stobart to use disposal proceeds to fund investments instead of dividend
The company intends to reduce its fourth-quarter dividend to 1.5p each in order to prioritise these investments and ensure it has a strong balance sheet. That means the total dividend for the year will be lowered to 15p from 16.5p last year.
Since March 2017, Stobart has funded dividends through disposals of non-core assets and gross capital expenditure of £67mln has been invested in its operating divisions.
“Though the group owns non-strategic assets with a book value at 31 August 2018 included in the interim statement of £149mln, the board believes it is prudent financial discipline to use proceeds from further disposals in the medium term primarily to invest in value-creating opportunities based on sustainable operating cash generation and to maintain a strong balance sheet,” Stobart said.
It added: “The board recognises the importance of dividends to its shareholders and will update the market accordingly, once it has completed the capital review.”
Analyst says reduced dividend 'sensible'
AJ Bell investment director, Russ Mould, thinks the decision to cut the dividend is "sensible" given that the income stream from Stobart has been sustained by the disposal of non-core assets in recent years.
“Investors like dividends because a big component of the potential gains from investing in the stock market is associated with these regular shareholder payments," he said.
“However, that doesn’t mean a dividend should be preserved at all costs and the decision by infrastructure services firm Stobart to trim its full-year dividend could turn out to be the right one for the business and therefore ultimately for shareholders."
--All else being equal--
-- Adds analyst comments --