Billionaire Kerry Stokes experienced a significant downturn in his wealth on Tuesday morning, with a drop of around $1 billion. This decline was not solely attributable to the performance of his media business, Seven West Media, which reported a meager full-year net profit of $16.6 million. Instead, the broader context of Seven Group Holdings (SGH), the parent conglomerate valued at $21 billion, played a pivotal role in the financial shifts observed.
Despite owning the well-known Seven Network, Seven West has not had a meaningful impact on the Stokes family’s financial health for some time. The company’s earnings, which took a substantial hit with a 64 percent decline, stood in stark contrast to the robust performance of SGH. The industrial giant reported a 9 percent increase in profit, amounting to $924 million before significant items. This growth is noteworthy, especially considering that SGH’s overall revenue remained flat, impacted by challenges in sectors like equipment rental, particularly in Victoria and South Australia.
The market responded sharply to SGH’s results, evidenced by a nearly 10 percent drop in share price, reflecting investor concerns over the company’s ability to sustain double-digit earnings growth moving forward. SGH’s media operations, similar to those of its competitor Nine Entertainment, grapple with the competitive landscape of digital advertising dominated by global giants like Meta and Google.
Despite these challenges, Kerry Stokes and his son, Ryan Stokes, who serves as SGH’s chief executive, can find some comfort in the company’s share price trajectory. Over the past two years, SGH’s stock has surged from $21 in December 2022 to $47 as of Tuesday. The conglomerate’s resilience is partly attributed to steady growth in sectors that have proven to be recession-resistant, such as infrastructure spending from state and federal governments, as well as substantial investments from major mining companies.
Additionally, SGH reported impressive operating cash flow of $1.95 billion, enabling the company to reduce its debt levels. This financial flexibility positions SGH well for future acquisitions, following the successful takeover of Boral, which has performed exceptionally under the group’s ownership.
The landscape for Seven West Media remains challenging, with the company’s ability to adapt to the rapidly changing media environment crucial for its future success. The Stokes family, while facing fluctuations in wealth, continues to navigate this complex market with a focus on maintaining the strength of their broader business portfolio.
