Property developer Stockland Group (SGP) expects to settle more than 6,000 residential lots in the year ahead as low interest rates help offset the economic impact of the mining downturn.
Stockland’s full-year net profit slipped 1.6% to $889 million in the 12 months to June 30, while underlying profit, which removes one-off items, rose 8.5% to $660 million, from $608 million in 2014-15.
The result was boosted by revaluation gains (like Mirvac on Tuesday) and the $73 million profit from its play in Australand last year. All up revenues rose 10.1% to $2.32 billion.
Chief executive Mark Steinert said the group’s commercial property, residential and retirement living businesses had all contributed significantly to Stockland’s strong 2015-16 results.
He said a company record of 6,135 residential lots were settled in fiscal 2016 and the developer had started the 2016-17 financial year with 4,567 residential contracts. More than 6,000 residential lots are expected to settle this financial year with settlements skewed towards the second half."
“The low interest rate environment is supportive of economic growth and we have set our business on a course that provides us with a positive outlook for FY17, despite considerable uncertainty in macroeconomic conditions,” Mr Steinert said in a statement issued with the earnings release yesterday.
“We have strong population growth and housing on the eastern seaboard in metropolitan areas remains undersupplied,” he added.
Stockland said funds from operations rose 12.5% to $740 million,beating guidance of 9% to 10% growth. Funds from operations will become Stockland’s main earnings target this financial year, which it says will be in line with what the rest of the industry does. It said it will still publish underlying profit figures.
It announced a final distribution of 12.3 cents, for a total distribution of 24.5 cents, in line with guidance.
The group reported growth across all its commercial property categories, with a $432 million revaluation lift across the portfolio, compared to $297million in 2014-15. That was partly offset by mark to market losses on financial securities and other assets.
But the group warned it was expecting the high sales volumes and robust growth in prices of land for homes it had seen this year to slow.
"Annual land price growth [of] 10 per cent over FY16 is now in line with the established market. Price growth is expected to moderate as affordability is tested but remains robust,” it said yesterday.
"Rebates and incentives have given way to direct price discounting in 2016."
Stockland securities dipped 1.4% to $4.87 yesterday.
