What do a seaside airport, a fleet of turboprop planes, a mountain of woodchips and a former council depot in Rotherham have in common?
Stobart Group is the holding company for this disparate collection of businesses. Founded in the 1970s by Eddie Stobart as a trucking business, it has grown into one of the most bizarre conglomerates to grace the FTSE.
Boardroom feuds and bold acquisitions have marked its recent history. In 2014 it split from the trucking business, best known for its lorries with such names as Cindy Ann and Barbara. Stobart still has a 12.5% stake in the trucking business, which was floated this year. Its remaining business revolves around Southend airport, aircraft leasing, biomass transporting and a scattering of investment properties, all accumulated by long-time former boss Andrew Tinkler.
Yet this ragbag of businesses still has a cult following. Invesco and Neil Woodford have 46% of the shares, which have taken off over the past 18 months and are up 60% this year alone. At 284.6p a share, that values Stobart at £1bn.
All this for a business that lost £8m last year on revenues of £129.4m. Stobart’s allure is its dividend: it paid out £34.7m last year and hints at a special dividend. It funds its 6.3% dividend yield by cashing in investment properties, such as a site in Liverpool sold to Ford, raising almost £53m of proceeds last year.
Lately, Stobart has been trying to grow up. Tinkler stepped aside in May and Warwick Brady, the former No 2 at easyJet, took the reins. Tinkler is still on the board but now splits his time with a curious new private equity venture. Stobart Capital is being run independently of the group.
Brady has a job on his hands. There is only so much left to sell before Stobart must rely on growth to fund payouts. About £108m of its £618m asset pile consists of its brand names and goodwill.
The biomass business aims to ship 3m tons of woodchips a year by 2022 but did less than a third of that last year. Brady wants to turn Southend airport into a rival to the London hubs, adding items such as a champagne bar to pull in 5m passengers a year by 2022. That’s a compound annual growth rate of more than 40%: Southend had about 900,000 passengers last year and lost £6.8m.
Last week Tinkler began selling what he said could total 10m shares (worth about £28m) to cut his stake to 5.3%. Getting out while the going’s good? Sell.
