Australia's Endeavour warns of higher supply costs from Iran war, shares fall (updated)

Endeavour

04/05/2026 07:46

Recasts, adds analyst comments in paragraphs 5-6 and 9

By Kumar Tanishk and Rajasik Mukherjee

May 4 (Reuters) - Australia's Endeavour EDV.AX warned on Monday that fuel and freight costs linked to the Middle East conflict would push up its supply-chain expenses, as the pub group rolled out a three-year A$100 million ($72.06 million) cost-saving drive.

Shares of the owner of liquor chain Dan Murphy's fell 3.8% and were among the top losers on the broader ASX200 index .AXJO, which closed 0.4% lower.

The group said its supply‑chain costs would increase by A$6 million to A$8 million in the second half of the year, adding that it was already facing pressure from higher fuel costs tied to the Iran war.

The group joins a growing list of Australian companies to flag the fallout of the Middle East conflict, warning that rising costs could squeeze profits and dampen volumes.

"Endeavour Group is caught in a particular uncomfortable squeeze," said Hebe Chen, a senior market analyst at Vantage Markets.

"Weakening demand and rising energy-linked costs are compressing both revenue and margins, while the Middle East warning strips away near-term visibility."

The group said momentum slowed late in the third quarter at its hotels unit as cost‑of‑living pressures weighed on consumers, underscoring continued weakness. Endeavour had earlier reported a 6.7% drop in interim underlying profit.

The alcoholic drinks retailer said the three‑year efficiency drive was aimed at delivering A$100 million in savings by fiscal 2027 through measures including cutting support‑office headcount and optimising its store network.

"The A$100 million cost-saving plan offers some near-term support but is unlikely to offset demand erosion as household spending softens," said Chen.

Endeavour is pre‑emptively lifting inventories by up to A$400 million to hedge against potential Middle East‑related supply disruptions, the group said, a move that will temporarily increase leverage through higher working capital funded by incremental short‑term debt.

($1 = 1.3877 Australian dollars)

 (Reporting by Kumar Tanishk & Rajasik Mukherjee in Bengaluru; Editing by Subhranshu Sahu)

 ((tanishk.Kumar@thomsonreuters.com; X: @thatstanishk))