Stobart Group Ltd (LON:STOB) reported strong first-half growth in revenues and underlying profits (EBITDA) and said that it would suspend the dividend in order to invest in growing its aviation and biomass energy businesses.
Stobart Aviation, which owns London Southend Airport, reported 42% growth in passenger numbers to 1.2mln in the six months to 31 August as Ryanair and Wizz Air joined easyJet as partners, with revenue climbing 26% to £26.4mln and EBITDA up 43% to £4.1mln.
The new investment plans aim to allow this to grow to 5mln in the year to February 2023, with an improved retail offering, recently added logistics customer and other major changes to the airport infrastructure driving profit per passenger.
Thursday’s results came a day after Virgin Connect, the 30%-owned airline joint venture with Virgin Atlantic and Cyrus Capital formerly known as Flybe, announced that it is opening a new base at Southend from which a total of five aircraft will serve 10 destinations.
Stobart Energy, meanwhile, processed 22.5% more wood waste and turned this into a 43.5% growth in revenue to £42.9mln and a 35% improvement in EBITDA to £11.7mln.
Overall, the group, which also owns stakes in Connect Airways, Eddie Stobart Logistics and other “non-strategic” infrastructure assets, reported revenue up 34% to £93.1mln and EBITDA up 187% to £12.1mln.
A statutory loss for the period of £20.9mln compared to £17.5mln a year ago, which was made up of a £8.5mln non-cash impairment of rail intangibles, £3.7mln brand amortisation and £7.4mln of new business set-up costs.
“In London Southend Airport and Stobart Energy, the group has two businesses with immediate and considerable growth opportunities,” said chief executive Warwick Brady.
"London Southend Airport continues to attract new airlines and is on course to deliver our target of 5mln annual passengers at £8 EBITDA by February 2023. At the same time, Stobart Energy is now set to become increasingly cash generative.
“Both of these exciting growth businesses require further investment in order to deliver their full potential.
“The board has undertaken an extensive review of the capital required to fund this growth and taken the decision to suspend the dividend in order to maximise the capital available for the further development of these growth businesses.”
This will conserve £11mln of cash in the current period and £22mln on an annualised basis, and a process to obtain new long-term debt has also begun.