Full Year 2024 Endeavour Group Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Simotas - Jefferies - Analyst : My question's on gross margin in the retail business. Good year-on-year performance through FY24, and that's across both of the halves. The margin did drop reasonably significantly in the second half versus the first half? And how should we think about that? Is that just seasonality in gross margins or as this period of gross margin expansion come to an end for a while, given the difficult conditions in the marketplace.

Question: Michael Simotas - Jefferies - Analyst : And your priority is to maintain EBIT margins. Do you need to grow gross margin in FY25 to do that?

Question: Lisa Yang - Goldman Sachs - Analyst : Just a question on the [$100 million] of the Endeavour Gold Savings and how we should think about which part of the business that touched. Can you please help us split it between GP, CODB, and retail versus hotels to the extent that you can?

Question: Lisa Yang - Goldman Sachs - Analyst : And then the forward 100, how should we think about the phasing between '25 and '26, please?

Question: Shaun Cousins - UBS - Analyst : Good morning, Steve and Kate. Maybe just a question on the interplay between one [Endeavourgo] cost. [Go] cost savings and costs, fiscal 2024 to be a period where you had $100 million in go cost savings and the one endeavor OpEx seemed to be only $45 million. So it was a net benefit, but fiscal '25 seems to be a year where you want endeavor cost step-up and the remaining $100 million over these two years sort of is hence lower. So I'm just curious how will endeavor plan to manage I guess, a net cost burden from the one endeavor Opics related to a slightly lesser realization of cost savings and more generally, when do you stop paying as much money what's when do we start to see that become part of a [pool] of cost savings that comes to you, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 26, 2024 / 12:30AM, EDV.AX - Full Year 2024 Endeavour Group Ltd Earnings Call

Question: Shaun Cousins - UBS - Analyst : And when do you stop paying Woolworths in aggregate, not at all. I'm just curious around the industry, it becomes a big bucket of savings that that arises in one year or another way you looked at it, we are fully independent?

Question: Tom Kierath - Barrenjoey - Analyst : Good morning, guys. Just a quick question on it for FY25. Kate, you've kind of said high-single digit EPS growth for '26 onwards, flagging a couple of headwinds in terms of interest costs and the one endeavor cost coming through in '25, are you expecting kind of a flattish year? Or APS for this year, how should we kind of think about that is the, I guess, the base for which you're going to grow at that high single-digit rate in '26 and onwards?

Question: Tom Kierath - Barrenjoey - Analyst : So just to paraphrase like So you're confident you can grow your EPS this year as a summary.

Question: David Errington - Bank of America - Analyst : Morning, Steve. Morning, Kate. Steve, I wanted to [hone] in on the cost side, again on the cost of doing business and a terrific chart that you provided on page 22 and Page 24, those bridging those bridge charts, which I find very useful. But what really did slap me in the face was that inflation number that obviously you've talked about with cost of doing business and majority of it's labor. I'm trying to get, Dan, you spoken in a very general terms, but I'm wondering if you can bring to life, please what are you doing to offset that now know that there's the award way, and I know that you've called out there's been a 5% increase in productivity in Dan Murphy's labor and I know that you've got other cost optimizations, but at the end of the day. Steve, where I'm going with this is that my worry is that if you don't really hack into that inflation number, then you're going to be a standstill business base, no matter how hard you work and no matter how hard you run this business. Can you go into place, bring to life for us? What are these things that you can do to bring down that cost in cost, if you like, the labor productivity in Dan Murphy's, 5% labor productivity that you've called out. What was that? And how can we expect to see that come through the numbers, the artificial intelligence in your hotels what are you doing in there that can help bring that cost down? Because you seem to be running the business really well, but unfortunately, there's things outside your control that just keep hitting you in that chart really is a powerful chart that shows what you're up against a low volume environment, I might say, with 2% volume growth with that inflation in costs, you're not going to get there in terms of delivering growth. So if you could bring to life some of the things you're doing, that would be really appreciated.

Question: David Errington - Bank of America - Analyst : Is setting the business up, like it's slow volume growth at the moment. It's everyone knows that I mean, it's a tough environment, but the volumes are probably pretty flat at the moment. So when volumes do pick up, can we expect to see leverage better than what it was previously?

Question: David Errington - Bank of America - Analyst : We won't talk about the football, we'll have to wait until next year or not.

Question: Bryan Raymond - JPMorgan - Analyst : Morning. I'm wondering just on maybe more one for Kate, just on net interest guidance. And really just trying to put this in context, given there's some really good momentum in reducing net debt this year, a lot of that through inventory, which was quite a lot of hard work went in there, but some can you just understand the various moving parts because I'd assume that net interest guidance is factoring in higher net debt into '25? And if you could help us understand sort of interest rate expectations, what you're thinking about in terms of cash realization are acquisitions are all the sort of big big moving parts that go into that, just so we can on ticket if possible. Thanks.

Question: Bryan Raymond - JPMorgan - Analyst : Okay. Just if I could just follow up on the interest on the working capital pace, would you expect further benefits to flow through or is there a bit of a one-off in terms of that, the inventory management that you saw in the period, just in terms of driving that net debt figure going forward?

Question: Ben Gilbert - Jarden - Analyst : Morning, Steve and Kate. Just a total of our customer count. You guys have done a great job around that. But just thinking about top-line from the pricing comment you put around in terms of pricing, et cetera, and downs, obviously, great. But can you give us some context around how you think you performed from a share perspective? And then secondly, just the extent to which you can leverage the dance brand more. And [cognizant] of some of the [CPUs], the liquor brands, either what groups are trying to donate and relief and others [Randfontein adjacencies] or categories went up and have a right to play in consumers' minds seeing that, how you get that top line moving that potentially start more materially outpacing the market for [cooking] truly a [post] market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 26, 2024 / 12:30AM, EDV.AX - Full Year 2024 Endeavour Group Ltd Earnings Call

Question: Ben Gilbert - Jarden - Analyst : And pub plus and media business in terms of have that sort of mode? Obviously, maybe you've got a business meeting and at that in terms of that ability to sort of turn those things into more material parts of the business, obviously made a big buzz word and focus in retail land loans coming means 20% of Woolworths earnings out of that. It's a great point.

Question: Craig Woolford - MST Marquee - Analyst : Morning, Steve and Kate. If you think a follow up on the sales backdrop. Just wanted to clear up what you were, I guess, hinting at as terms of that exit run rate on sales, but just more importantly, has been a really tough 12 months on volumes underlying volumes for the liquor industry. Do you see while they typically do decline, do you see that easing off at some point in the next few months. So what's the outlook for the industry backdrop for silica retail in your mind?

Question: Craig Woolford - MST Marquee - Analyst : And at that 2% exit run rate that you had that was retail rod, that you were referring to is do you want us to think about the 2% is a sensible figure? It's one week, so we don't extrapolate too much on a single week, what do you think the underlying trends is? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 26, 2024 / 12:30AM, EDV.AX - Full Year 2024 Endeavour Group Ltd Earnings Call

Question: Richard Barwick - CLSA - Analyst : Good morning, guys. I have got a question around the gross margin within retail. I know you sort of touched on a little bit already but you may say, if you look at the what you called out as the drivers being the product innovation and with Pinnacle playing a big role, and I think you've been pretty clear that you expect that to continue, but it's the [AI] driven price and promotion optimization. Is there more that you think you can deliver there or is this more captured in this result was trying to get trying to think about a baseline figure for this GP margin and what are the positive drivers going forward?

Question: Richard Barwick - CLSA - Analyst : Thank you. And just to clarify one comment, the that shift from the consumer into the bigger pack sizes as they hunt value, what does that mean for GP for you guys? Is that a positive or a negative driver? It puts and takes sometimes the GP margin?

Question: Ross Curran - Macquarie - Analyst : Our team. This is one question. I know you have two parts to it, but just looking at Board's assessment of your performance over the last year, there's two areas sort of pinned you on one was around working capital days. So firstly, just dictate what's happening with working capital days and then second around safety. And have you gone too hard on taking jobs out of the business and is that driving that pickup in hours lost on safety?

Question: Philip Kimber - E&P Capital - Analyst : Hi, guys. Just a question on the hotel business, where if I look on a 52-week basis, looks like the second half might have just been down a bit. And when I look at it, it looks like it's more at the cost of doing business things and at the gross profit and Associates. Wondering is that just a timing issue or is there something else going on there? And then my sort of follow-up question was just around them in the hotel business. When do you start cycling the -- your voluntary changes around the gaming. I think that might be coming up soon. So on whether that will whether that was a bit of a meaningful drag that's about the cycle. Thanks.

Question: Sam Teeger - Citi - Analyst : Hi, Steve. Hi, Kate. Just keen for your latest thoughts around potential gaming rate changes or broader impacts on the business from the upcoming Queensland election this year and the Western Australian election early next year?

Question: Peter Meichaelboeck - Select Equities - Analyst : Hi, Steve. Hi, Kate. Just in relation to the hotel segment, Tom, at the Investor Day you provided some months segmentation is how you're looking at the business these days in the city, suburban regional, et cetera. I was just wondering if you could provide any color in terms of any differences you're seeing across those segments? Particularly for food and gaming. Are you seeing differences in growth between those segments for [a ramp] in a city versus suburban versus regional, et cetera?

Question: Lisa Yang - Goldman Sachs - Analyst : Hi. Thanks for taking a follow up. I just was trying to understand the CapEx guidance for [450 to 500]. If I take the midpoint of that and then also reverse out the midpoint of the one. And Deborah, I get to roughly to [$400 million]. That's a little light call and I $420 million lower than what FY24 was external (inaudible). But then we also called out stay in business, $30 million one-off that won't repeat. Pinnacle will be down massively So that's, you know, basically call it [$70 million, $80 million] down. So does that mean [hotels] we'll see a large step-up from this year.

Question: Lisa Yang - Goldman Sachs - Analyst : I'd say. So does that hotel CapEx already include the potential redevelopment potential that you had earlier talked about that's going to FDA and all of that.

Question: Lisa Yang - Goldman Sachs - Analyst : Mainly in the hotel, sort of normal course of renewals and expansion to be higher than what it was in '24.

Question: Bryan Raymond - JPMorgan - Analyst : Thanks for taking my follow up as well. Just on the retail business quickly, but we want to have is around the BWS performance relative to Dan Murphy's, the comment you made before him, one was the market share at every month. I think those through FY24 just became understand if you're saying that those trends predominately driven by them these And if you're comfortable with where they WSEs from a value perspective and how it's resonating as an offer more broadly or if there's something you need to address that. Thanks.

Question: Bryan Raymond - JPMorgan - Analyst : But just to confirm, if I'm obviously impressed with the announcement on a 52-week basis, BWS and Dan Murphy's, 4Q sales were down 0.2%, flat in the third quarter. It up about 1% overall. Yes, based on the feedback this, Dave, I think you mentioned BWS is sort of leading the way earlier in the year, and Dan has improved, but BWS and probably above that 1%. And then below like would that be a fair assumption of the data in front of me?