This article is from the Australian Property Journal archive
DESPITE Omicron and supply chains disruption, industrial monolith Goodman Group continues to capitalise on the digital economy and logistics boom, delivering a bumper first half year statutory profit of over $2 billion and upgrading its FY22 earnings growth to 20%.
Goodman announced a statutory profit of $2,002.8 million for the six months to December 31, which includes valuation gains, doubling the previous half year result of $1.041 billion.
The group delivered operating profit of $786.2 million, up 28% on the first half of FY21, and operating earnings per security (EPS) of 41.9 cents2, up 27% on the previous corresponding period.
As a result of the strong progress to date and the outlook for the remainder of the year, the group has increased its guidance for FY22 with operating EPS growth projected to be 20%.
CEO Greg Goodman said the group’s long-term focus on infill locations is underpinning its strong performance and driving the volume and scale of the $12.7 billion workbook.
“It’s also increasing the value of our projects. The average value of our development WIP now exceeds $3,700 per square metre and reflects the prime location, expected growth in rents and consequently better cap rates, for these properties.
“Demand for our properties remains high, driven by the continued growth of the digital economy and the need for greater supply chain efficiency for our customers,” he added.
Moody’s Investors Service senior vice president Matthew Moore said Goodman’s strong results for the first half of the fiscal year ending June 2022 are a credit positive.
“All segments benefitted from strong growth in demand from changing consumer behaviours, increased data usage and companies’ greater focus on supply chains. The good quality and location of Goodman’s assets will enable the company to continue benefitting significantly from these market trends.
“Goodman’s financial metrics remain strong for its ratings, reflecting substantial earnings growth, the group’s low gearing levels and its conservative financial policies,”
“While development earnings are more volatile through the cycle, we expect earnings from this segment to remain high. Also, Goodman’s low gearing levels and excellent liquidity profile mitigate the segment’s earnings volatility. As its developments complete, they will provide higher and more stable management and investment income.” Moore said.
Earnings from investments are up 19% on 1H21 to $234.0 million underpinned by like-for-like NPI growth of 3.4%, continued strong occupancy at 98.4%5, and growth in the property portfolio, with over $4.1 billion in development completions and $3.3 billion of incremental acquisitions.
The group leased 4.5 million sqm on a 12-month rolling basis to 31 December 2021, equating to $619 million of annual rental property income.
Goodman said the group remains focused on regeneration of existing land and buildings and enhancing value through intensification of use such as multi-storey developments which make up $6.8 billion of the current WIP.
Goodman’s WIP of $12.7 billion is 63% pre-committed and completed projects averaging 99% leased.
Meanwhile external AUM across 16 managed partnerships have grown 32% to $64.1 billion, which has bolstered management earnings, which are up 18% on 1H21 to $258.2 million.
The group is advancing its commitment to renewable energy with another 75MW of solar to be committed or installed by June 2022 taking its total to 200MW, halfway to the 2025 target of 400MW.
“Our strategy to provide essential infrastructure for the digital economy is delivering. The business is performing strongly across all segments, including our development projects, leasing success, rental growth, significant valuation uplift and the strong performance of our partnerships.
“In addition, COVID related disruptions in FY22 have been managed to have less impact on the full year projections than we had initially assumed. The operating outlook for the business is strong and gives us confidence for the remainder of this year.
“Consequently, we are upgrading our market guidance for FY22, with Operating EPS growth projected to be 20%.” Goodman said.
Forecast distribution for FY22 remains at 30.0 cps.
