Property developer and shopping centre owner, Stockland said its annual net profit rose by 34%, although its growth in funds from operations would likely ease this year partly due to higher energy costs.
The company yesterday reported a net profit of $1.2 billion for the 12 months through June, up from $889 million a year earlier as housing sales and retail earnings rose strongly.
Stockland said its funds from operations (FFO, a key measure for trusts) rose 8.5% to $802 million in the 2017 financial year and funds from operations per security rose by 7.4% to 33.4 cents, above the new guidance for growth of 6-7% provided in February.
However the company sees growth slowing this financial year to between 5% and 6.5%, partly due to rising electricity prices. The company sees faster growth in the December half year than in the six months to next June.
“We expect FY18 FFO growth to be slightly lower than FY17, primarily due to non Sydney office let-up assumptions, higher commercial property outgoings, particularly electricity prices, and lower retirement living development profit reflecting project timing,” CEO, Mark Steinert said yesterday.
Stockland declared a final dividend of 12.9 cents, payable on August 31. The full year payout is 25.5 cents a unit, up from 24.5 cents.
It forecast a 4% increase in distributions in the 2018 fiscal year to 26.5 Australian cents per security.
“Our Residential and Retirement Living businesses achieved record results, and Commercial Property delivered a good performance across the different asset classes, despite challenging conditions in the retail market,”Mr Steinert said yesterday.
Stockland warned that rising electricity prices would curb profit growth this year even as it reported a stronger-than-expected performance for the year to June buoyed by Australia’s booming market.
The company settled a record 6,604 lots during the year and forecast settlements this year to stay above the 6,000-mark (which is a handy measure for the company’s continuing performance in this area).
Profit in commercial property, Stockland’s largest division, rose 4.2% to $608 million as its retail town centres business gained 4.1% to $419 million and its logistics and business parks division rose 8.3% cent to $143 million.
This pace of growth in retail was likely to slow to “about 3 per cent” this year while the growth in logistics and office parks it would be between 3% and 4%, Mr Steinert said yesterday.
He believes the sharp rise in electricity costs will hit retailers and customers and impact growth from its shopping centres.”Our commercial income growth will be lower in FY18 because of the impact of electricity costs, as well as other assumptions,” he said yesterday.
The company’s units fell 0.9% to $4.35 yesterday.
