Australia’s global industrial property developer, Goodman (ASX:GMG), is aiming to boost earnings again this year as it focuses on expanding its involvement in data centres for cloud computing and artificial intelligence.
The company, already active in this sector, plans to increase its footprint across Australia, Asia, and Europe. As a result, Goodman forecasts its operating earnings per share to climb by roughly 9% to 117.2 Australian cents in the financial year ending June 2025.
The company intends to maintain its dividend at 30 Australian cents per share. Similar to previous years, this is an initial estimate, and historical trends suggest it could be revised upwards. Goodman has exceeded earnings guidance twice in the past year, including surpassing its most recent target in Thursday's release of its June year results.
Goodman reported a 14% increase in annual operating earnings per share, surpassing the 13% growth forecast given to investors in May. While the company recorded a statutory net loss of A$98.9 million for the 12 months to June, compared to a A$1.56 billion profit the previous year, this reflects valuation adjustments to property values.
Goodman's enthusiasm for data centre opportunities has intensified over the past year, and Thursday's announcement reaffirmed this commitment. The company's development pipeline reached A$13.0 billion across 80 projects at the end of June. Management has also highlighted the increasing demand for industrial property closer to population centres as businesses optimise supply chains.
“We are actively negotiating with several customers for powered shell and fully fitted turnkey data centre facilities across our portfolio, with significant new projects expected to commence between now and the end of 2025,” said CEO Greg Goodman.
“The rapid expansion of the digital economy, driven by e-commerce, cloud computing, and emerging technologies like artificial intelligence and machine learning, is creating substantial opportunities for Goodman to develop the infrastructure our customers need,” Goodman added. “Our focus remains on logistics and data centre opportunities in key cities worldwide, where barriers to entry are high, and supply is limited.”
Goodman reported 97.7% occupancy at the end of June, with like-for-like net property income growth of 4.9% over the past year. Total assets under management declined by 3% to A$78.7 billion.
Moody’s welcomed Goodman’s results, particularly the planned increased focus on data centres. Analyst Mariano Ferreyra stated in a note on Thursday that the figures aligned with expectations, supported by higher operating earnings, strong rental growth, high occupancy, and robust development earnings.
While anticipating a slowdown in demand for industrial assets, Ferreyra believes underlying fundamentals remain supportive due to supply chain efficiency needs, population growth, and increased e-commerce adoption. He expects Goodman's operating performance to remain strong, underpinned by its well-located industrial and logistics portfolio.
“The growth of cloud computing and AI continues to drive demand for data centres, which will be a key area of capital allocation and earnings growth for Goodman over the next few years,” Ferreyra concluded.
