May 4 (Reuters) - Australia's Endeavour 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, 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)
By Kumar Tanishk and Rajasik Mukherjee
