Ryan Stokes leads SGH to new heights with record underlying profit and cash generation

Leading diversified business SGH has surged to another record half-year result as its chief executive Ryan Stokes predicts there could be more blue sky ahead.

SGH-owned building materials provider Boral and Caterpillar machinery supplier WesTrac were standout performers as the group’s bottom line soared during the final six months of 2024 to $526 million, up 134 per cent from $225m for the same period a year prior.

The result pushed SGH’s shares up 5.7 per cent higher in early Tuesday trade.

Boral’s earnings before interest and tax jumped 29 per cent to $259m in its maiden half-year under full ownership of SGH.

SGH’s underlying profitability, which mostly stripped out the sale of Coates Indonesia during the first half of the 2024 financial year, was up 7 per cent to $508m and operating cash flow rose 15 per cent to $821m — both record results that continued a stellar post-COVID run.

Revenue increased 2 per cent to $5.5 billion, driven by strong sales and service activity at the mining-focused WesTrac, which offset small revenue decreases across Boral and Coates.

SGH’s bottom line outperformed its revenue growth as the group homed in on delivering higher margins in “variable market conditions” across its diversified portfolio.

Beyond Boral and WesTrac, SGH owns industrial equipment hire firm Coates and mobile lighting business Allight.

SGH also has a 30 per cent stake in natural gas producer Beach Energy and a 40 per cent interest in Seven West Media.

Mr Stokes said a “constant focus” on prudent capital allocation and enhanced customer service were key drivers behind the strong result.

“Boral’s performance journey is delivering ahead of the expectation that we had,” he said.

“We still have a lot of confidence in the infrastructure and construction outlook, but in general, that market in the last six months has been patchy with the Victorian market somewhat under pressure.

“Other aspects of the economy are doing well, but our focus is always on delivering results through varying market conditions.”

As Australia heads towards a lower interest rate environment, Mr Stokes said a rate cut was unlikely to give SGH’s industrial businesses like Boral, Coates and Allight a direct boost, but he believed SGH stands to benefit from the broader flow-on effect of increased infrastructure and housing investment.

“The interest rate cut is probably going to be a catalyst to see that residential activity increase, it’s clear that the residential construction and number of dwellings commenced is below the (national) housing board target,” he said.

“Having a catalyst around interest rates is only going to be positive towards that.

“Indirectly, we would expect this supports increased confidence in the construction market.”

Mr Stokes was also positive about WesTrac’s year ahead. It has a strong order book and a growing stream of repeat revenue via its services business.

The bulk of WesTrac’s earnings are tied to iron ore, a commodity most analysts expect will experience a price fall this year. Mr Stokes, however, said WesTrac would largely be shielded from the volatility.

“There might be question marks around the price (of iron ore), but we know our customers in WA have the lowest cost production and are best positioned anywhere in the world, so we’re confident from that perspective.”

Mr Stokes said SGH, and the economy more broadly, would benefit from government policy resolving major project delays.

“You look at some of the continued project delays and project costs on the major infrastructure projects, and how much is linked to the complications of getting approvals, regulatory approvals, environmental approvals, the like, are all adding to the cost of infrastructure,” he said.

“So if those issues are streamlined, there’s better focus on enabling activity to occur then it’s going to support our customers and then support us.”

SGH’s dividend rose by 30 per cent to 30¢ a share and including those dividends the group delivered a total shareholder return of 25 per cent for the half.

SGH, formerly known as Seven Group Holdings, maintained its guidance of high single-digit EBIT growth for the 2025 financial year.