Diversified trust Stockland says there are definite signs the residential sector, in which it operates, has turned the corner, but cautions that the business is trading off a low base.
Speaking at his inaugural annual general meeting in Sydney, chief executive and managing director Mark Steinert said demand had increased for its housing developments across Sydney, including at Willowdale in East Leppington and at Melbourne's Craigieburn.
The confidence was against a poor performance this year, where the underlying profit was $495 million, down from $676 million last year. The statutory profit was $105 million, after a negative impact from the residential project impairment provisions, announced in May.
"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 was committed to the retirement living market, and the ability for this business to grow was largely "in our control".
Mr Steinert reaffirmed the forecast for earnings per share next year at 4 to 6 per cent above this year's, assuming no material decline in market conditions.
He said the group would continue to focus on reducing its exposure in the CBD office sector and use the cash raised from asset sales in retail redevelopments, such as at Merrylands and the $222 million upgrade of the Wetherill Park mall.
The online retail boom had led to a higher demand for warehouse space, where the group planned to increase exposure.
Chairman Graham Bradley said there were no material changes to remuneration policies after the review last year.