Australand signals stronger half after 9% drop
Australand directors are expecting an improvement in the company's residential business over the coming months as more land and home sales are exchanged, which will help to offset the flat office market.
The diversified developer, which has been the subject of takeover speculation since December, reported a 9 per cent drop in net profit to $62.4 million for the six months to June 30.
The result was influenced by the timing of housing sales. In the current half about $330 million of sales are due to be settled, which will boost full-year profits.
After one-off items, Australand reported a 1 per cent decline in statutory profit to $88.4 million.
An interim distribution of 10.5¢ per security was declared and will be paid on August 7. The group expects to pay a distribution of 11¢ for the second half.
Australand was taken off the market this week after its major shareholder, CapitaLand, said it would retain its stake following a review of the business.
Managing director Bob Johnston told analysts that while the takeover process - started last year when GPT made a conditional bid, which was rejected - had created uncertainty, "it's now behind us".
He said the dip in earnings was a timing issue related to the residential business and forecast a stronger second half with a full-year growth of 3 to 4 per cent. The residential/development business reported a 35 per cent drop in earnings in the first half to $22.3 million.
Mr Johnston said full-year earnings from residential were expected to be similar to last year's.
In contrast, the investment division had benefited from long leases and high occupancy, which generated recurring income. The division reported a $17.2 million rise in property valuations.
"Despite business and consumer confidence continuing to be fragile, residential sales activity strengthened during the first half, with contracts on hand up 36 per cent," Mr Johnston said.
While conditions for the industrial and office portfolio were expected to be flat, he said there had been some rental growth from the completion of development projects.