Diversified trust Stockland says there are signs the residential sector, in which it operates, has turned the corner, but cautioned the business was trading off a low base.
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.