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Stobart Group Ltd: DEEP DIVE

Stobart focuses on expansion of Southend Airport and energy business after 'transformational year'

"Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors," chief executive Warwick Brady said.
OVERVIEW: STOB The Big Picture
Southend Airport welcomed 1.5mln passengers last year
  • Stobart focuses on expanding Southend Airport

  • Balance sheet derisked through disposal of airline and aircraft leasing units

  • Strong revenue in year to February 2019


What Stobart does:

Stobart Group Ltd (LON:STOB) is a FTSE 250-listed infrastructure and support services firm with interests in aviation, energy and rail.

Within the aviation arm, the company owns London’s Southend Airport.

Stobart has been ramping up investment at the airport after selling its regional airline and aircraft leasing businesses to Connect Airways – the joint venture it set up with Virgin Atlantic and Cyrus Capital.

The company sold the businesses in exchange for becoming a 30% shareholder in the venture. Cyrus is the lead partner in the venture with a 40% stake while Virgin owns a 30% interest.

Stobart’s energy services division delivers waste wood and other waste derived fuels to biomass plants in the UK.

The rail and civils unit provides specialist rail, civil and infrastructure engineering and management services to customers such as Network Rail. 

Inflection points:

  • Stobart is expanding its Southend Airport to accommodate more than 10mln passengers. The airport welcomed 1.5mln passengers in the year to February 2019 and the company aims to reach 5mln passengers by 2023 
  • The firm has spent more than £150mln to date developing the airport, attracting tier one airlines and building a new terminal, control tower, jet centre, hotel, car parks and train station. Last year it also spent £10mln on a runway improvement programme.
  • The company is also investing in growing the energy business to deliver 2mln tonnes per year of biomass fuel.
  • To support its investments, Stobart has raised £53.1mln through the issue of a five-year exchangeable bond secured over its shares in Eddie Stobart Logistics PLC.
  • 2019 revenue gained 39% to £146.9mln and underlying earnings (EBITDA) from the two main operating divisions – aviation and energy – jumped 75% to £24.1mln. The total loss for the period widened to £58.2mln from £23.9mln, reflecting losses in the rail and civils unit.
  • Stobart has set a five-year strategic plan for the rails and civils unit to increase contracts with existing partners and external customers. It aims to return the business to profitability over the “medium term”.
  • Stobart has derisked its balance sheet with recent disposals in aviation and impairments on non-core assets 

What the CEO says: 

Chief executive Warwick Brady said fiscal 2019 was a "transformational year", having dealt with legacy issues and derisked the balance sheet.

"Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors," he said.

"These are high growth assets with strong market positions that are now well positioned to become increasingly cash generative."

He added: "We will invest in accelerating the growth of our aviation and energy businesses through existing cash resources and further non-core asset sales. By doing this, we can deliver sustainable operating cash flows and significant long-term value for shareholders."

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Stobart Group Ltd Timeline

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"Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors," chief executive Warwick Brady said.

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