This article is from the Australian Property Journal archive
HIGHER prices and margins have seen Simonds swing to a first-half profit, despite lower revenue in the tougher residential market, and the home builder said favourable trends continued into January.
Simonds posted a $2.5 million interim net profit after tax, having delivered a $12.7 million loss in the prior corresponding period (pcp).
Revenue was $337 million, down by $45 million on the pcp due to a lower number of jobs on site, while improved productivity supported higher settlements. Retail starts remained softer given higher interest rates and cost-of-living pressures.
Simonds commenced 962 site starts during the period, 137 starts lower. It said a reduction in starts for the period was expected by management given the weaker macroeconomic environment. Offsetting lower site starts was continued improvement in both site start value and margin of jobs started in the period.
“Our earnings growth of $17.6 million against the comparative period last year reflects the dual impact of lower operating costs and expanding margins on jobs going to site. This is further underpinned by a more diverse revenue mix following our recent investments into new channels to market,” said Simonds group CEO David McKeown.
“The group remains optimistic about future trading performance given the improved margin profile of work in progress, improving retail demand and a continued focus on cost improvement,” it said, adding that these trends continued and were drivers of a strong January performance.”
“Looking ahead, we see a number of leading indicators supporting an increase in retail demand although caution that affordability and consumer confidence in the sector are likely to remain challenged in the short term.”
Weak home lending data followed Australian Bureau of Statistics data show dwellings approvals tanked in 2023, to 162,194, a number not seen in a decade. Another year of low starts is expected.
Simonds has available liquidity of $34.1 million, comprising of $9.6 million cash on hand and unused banking facilities of $24.5 million. In December, the banking facility was renewed and extended the end of 2025.
Over the six-month period, net asset position rose from $14.5 million to $16.9 million.
