A busy day for retail-related companies yesterday with Westfield Group leading the way in revealing a US joint venture and asset sales, with asset sales in the UK as well, plus reasonable 12 month results.
Westfield Retail Trust, the 50% owned affiliate also had a solid year, despite the weak retail climate in Australia in particular.
Noni B, the small Sydney-based women’s wear group revealed better than forecast results, while The Reject Shop, the lower end discounter, also did better than some investors had expected, despite the weak trading conditions.
And Carsales.com also lifted earnings as the online car selling business grew.
Westfield Group stood out with its $US4.8 billion ($4.7 billion) joint venture with Canada Pension Plan Investment Board (CPPIB) for 12 of the group’s lesser performing malls in the US.
The company also announced the sale of its interest in three shopping centres in the UK for $240 million.
Westfield Group said it lifted its full-year net profit by nearly 40% to $1.532 billion in 2011 from $1.1 billion a year earlier.
While that helped the securities rise yesterday, investors were more enthusiastic about the company’s promise that the US joint venture and the comments that management would be looking for similar deals as it seeks to cut or reduce its exposure to existing markets, raise cash and re-invest in faster growing economies.
That helped the securities rise more than 5% or 44c to $8.81 yesterday.
The company recently started a move into Brazil and it has bought into Italy (which is hardly a new growth area compared with Brazil) as it seeks to expand outside its bases of Australia, NZ and the US. It has a presence in the UK which is now obviously on hold with yesterday’s sales.
Westfield Group’s US deal will see the Canadian group becoming a 45% partner in a group of 12 malls Westfield currently owns. Westfield said the deal will generate about $US1.85 billion of net cash for it to use in other expansion moves.
"We continue to look at attractive development and acquisition opportunities globally, and are well placed to deliver long term sustainable earnings growth," Westfield’s Co-CEOs Peter Lowy and Steven Lowy said in yesterday’s statement.
Westfield Group said revenue rose more than 10% to $4 billion for the year, while funds from operations were $1.49 billion (or 64.8c per security).
The Co-CEOs said the profit result was at the upper end of the group’s earnings forecast and came despite increases in the Australian dollar’s value against the UK pound and US dollar in 2011.
The result was driven by a 7% rise in net property income, a 100% increase in the group’s property management income and a 92% lift in project income.
“2011 was a significant year for the Group. We continued to implement our strategy of increasing return on equity with the joint venturing of the £1.75bn Stratford City and the sale of Cairns (Australia) and Nottingham (UK),” the Co-CEOs said.
“Importantly, we expanded our business platform into strategic new markets with our entry into Brazil as well as our investment in major iconic retail development projects in Milan (Italy) and at the World Trade Center in New York.
"We will continue to appropriately manage our invested capital position, including introducing further joint ventures and dispositions of non-core assets, to deliver sustainable earnings growth and higher return on equity."
Besides looking for new growth markets, Westfield Group says it will start work on up to $1.5 billion worth of new developments in 2012 and 2013.
Westfield Group also forecast an increase in distribution for the 2012 year to 49.5c per security from 48.4c per security in 2011.
The distribution to shareholders for the 2011 year was 48.4c per security.
There was an added boost for investors with a buyback of up to 10% of the group’s issued securities announced.
That added to the demand for the securities yesterday, which had a tough 2011, falling 18%.
Westfield Retail Trust saw its securities rise 3% or 6c to $2.41 after it reported a profit of $851.7 million for 2011, its first full year of trading after the split from parent Westfield Group.
The Trust said that profit equates to 27.9c per stapled security, a performance the group claimed yesterday had beaten expectations.
Distributable earnings for the 12 months was $561.6 million, or 18.39c per stabled security, WRT said in yesterday’s announcement.
Distributions for the 12-month period total 16.5c per stapled security, or 90% of distributable earnings for the period.
A final distribution of 8.4c per stapled security was confirmed yesterday.
Westfield Retail Trust Managing Director Domenic Panaccio said in yesterday’s statement that the trust delivered distributable earnings ahead of the forecasts provided to the market in December 2010.<
