July 26, 2012
Australand is confident of delivering earnings growth in 2012 after reversing its profit slide amid tough times in the property development market.
Shares in Australand, whose property portfolio is worth $2.3 billion, were 10.5 cents, or 4.1 per cent, higher at $2.655 at 1339 AEST.
Australand today reported a six per cent rise in net profit to $89.7 million for the half year to June 30 compared to the previous corresponding period, aided by better earnings from its residential business.
Operating profit rose five per cent to $68.2 million while revenue was 41 per cent higher at $392.9 million.
Australand said while it was too early to judge the effect of recent interest rate cuts were having on consumers, it believed it could lift full year operating earnings by three to four per cent.
The earnings boost is expected to be driven by the high level of residential development contracts Australand has in hand, as well as minimal lease expiries, fixed rental growth and high occupancy rates in its property portfolio.
"Trading conditions remain challenging due to both global and domestic uncertainty, leading to a lack of business and consumer confidence," managing director Bob Johnston said in a statement.
"The group, however, remains well positioned to deliver growth in operating earnings for the full year."
The first half result was a welcome turnaround from the 15 per cent plunge in full year profit for 2011, the developer announced in February.
Australand's investment property division's earnings increased seven per cent to $87.7 million in the first half, with comparable rental growth of about 3.2 per cent.
Residential earnings soared 46 per cent to $38 million on the back of the settlement of several medium-density projects, including Kangaroo Point in Queensland and Cockburn Central in Western Australia.
Sales were also 15 per cent higher, lifting contracts on hand to 1316 by the end of June, with 59 per cent expected to settle in the second half.
However, earnings at the commercial and industrial division fell 26 per cent to $9.5 million, reflecting ongoing weakness in business confidence.
Mr Johnston said while demand remained subdued, enquires were improving, particularly from logistics service providers and larger retailers.
Australand declared an interim distribution of 10.5 cents per stapled security.
It still expects to pay a further distribution of 11 cents for the second half, resulting in full year distributions of 21.5 cents per stapled security.