Stockland sees signs of recovery in housing sector
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.
Frequently Asked Questions about this Article…
Stockland has observed increased demand for its housing developments, particularly in areas like Sydney's Willowdale and Melbourne's Craigieburn, indicating a recovery in the residential sector.
Stockland reported an underlying profit of $495 million, which is a decrease from $676 million last year. The statutory profit was $105 million, impacted by residential project impairment provisions.
Stockland's CEO, Mark Steinert, expects a steady improvement in earnings from the 2014 financial year, with a forecasted earnings per share increase of 4 to 6 percent, assuming stable market conditions.
Stockland is focusing on new retail, residential, and retirement living projects, as well as industrial letting, rental growth, and cost reduction initiatives to drive future growth.
While seeing improvements, Stockland acknowledges that residential earnings will be constrained due to trading through impaired and low-margin projects. They are also focusing on medium-density housing development.
Stockland is committed to the retirement living market, with growth largely within their control, indicating a strategic focus on expanding this segment.
Stockland plans to use cash from asset sales to reduce exposure in the CBD office sector and invest in retail redevelopments, such as the Merrylands and Wetherill Park mall upgrades.
The online retail boom has increased demand for warehouse space, prompting Stockland to plan for greater exposure in this area to capitalize on the trend.