Residential sector boosts Stockland
Speaking at his inaugural annual meeting in Sydney, chief executive and managing director Mark Steinert said demand had increased for its housing developments across Sydney, including at Willowdale and East Leppington, and at Melbourne's Craigieburn projects.
The renewed confidence was against a poor performance in the 2013 year, in which the underlying profit was $495 million, down from $676 million the previous year. The statutory profit was $105 million, and was negatively affected by the residential project impairment provisions, announced in May this year.
"I am confident we will see a steady improvement in Stockland's earnings from the 2014 financial year, as new retail, residential and retirement living projects begin to contribute, and as recent industrial letting, rental growth and cost reduction initiatives begin to come through," Mr Steinert said.
"I do caution, however, that while we are seeing improvement in the residential market, residential earnings will be constrained as we continue to trade through impaired and low-margin projects. It will also take some time to see the full benefits of our new strategic priorities, particularly in industrial and medium-density housing development."
He said Stockland remained committed to the retirement living market, although the ability to grow this business was largely "in our control". He said the group had a strategy and timeline to grow the operations.
Mr Steinert reaffirmed the group's forecast for the 2014 earnings per share to be 4-6 per cent above 2013, assuming no material decline in market conditions.
He said the group would continue to focus on reducing its exposure in the city office sector. It would also invest in warehouses with the growth in e-tailing.
Frequently Asked Questions about this Article…
Stockland has observed signs of improvement in the residential sector, with increased demand for housing developments in areas like Sydney and Melbourne. However, the company cautions that it is still trading off a low base.
In 2013, Stockland reported an underlying profit of $495 million, which was a decrease from $676 million the previous year. The statutory profit was $105 million, impacted by residential project impairment provisions.
Stockland's CEO, Mark Steinert, expressed confidence in a steady improvement in earnings for 2014, driven by new retail, residential, and retirement living projects, as well as industrial letting and cost reduction initiatives.
While there is improvement in the residential market, Stockland's residential earnings are expected to be constrained due to trading through impaired and low-margin projects.
Stockland is focusing on new strategic priorities, particularly in industrial and medium-density housing development, to drive future growth.
Yes, Stockland remains committed to the retirement living market and has a strategy and timeline to grow its operations in this sector.
Stockland has forecasted a 4-6% increase in earnings per share for 2014 compared to 2013, assuming no significant decline in market conditions.
Stockland plans to reduce its exposure in the city office sector and invest in warehouses to capitalize on the growth in e-tailing.