Goodman targets 9% profit growth
Goodman Group says its global reach, a $2.5 billion development pipeline and growing pool of funds under management should help it realise growth in profit of about 9 per cent in the coming year.
The country's biggest industrial real estate investment trust on Thursday reported a 17 per cent jump in net profit to $544 million. The profit lift for the year to June led to an 8 per cent rise in distribution to investors of 19.4¢ a unit, of which 5.2¢ was fully franked. Payment is on August 26.
Chief executive Greg Goodman forecast a net profit of $594 million for the 2014 year, equating to operating earnings per security of 34.3¢, up 6 per cent on 2013.
UBS analysts called the result "solid" and the guidance of 6 per cent growth was expected.
"The balance sheet metrics continue to improve, with development work in progress growing, and capital in place for developments, with further initiatives pending," a UBS analyst said.
He said the group's global footprint was a natural buffer for volatility, although he cautioned that Europe remained sluggish. China's growth was likely to stablilise at about 6 per cent, and in the US conditions were slowly improving, he said. Despite the recovery it was still difficult to attract capital in that market.
In Australia, both south and western Sydney were competitive for commercial property operators looking for premium sites.
This was more pressing "as more bricks and mortar retailers move into buying and developing their own properties", Mr Goodman said.
But he said business was "well positioned" with the DHL Oakdale Estate in western Sydney and large slabs of land around in Melbourne. "The business is well catered for," he said.
One large site is at 506-530 Gardiners Road, Alexandria, in Sydney's inner south, which has been withdrawn from sale and will probably be developed into a two-storey warehousing facility.
Mr Goodman said the group was in discussion with several parties, but hosed down speculation that included the Amazon.
He said a global $2.5 billion development pipeline was expanding with its joint-venture partners, the Canada Pension Plan Investment Board in the US and Japan.
Over the past year Goodman has also raised $2.8 billion of new third-party equity, while overall earnings were also driven by organic growth, with new markets expected to contribute to 2014 profit.
Mr Goodman said it was unlikely new funds would be established, but added that growing funds under management was a key strategy to give the group firepower to enter new markets.
If the price suited, he said, selling land to residential developers was always an option.