This article is from the Australian Property Journal archive
RESIDENTIAL property developer and land syndicator Peet Limited has recorded a 61% drop in net profit after for the half year ended 31 December 2011 of $8.7 million.
CEO Brendan Gore blamed the significant decrease due to difficult property market and economic conditions.
“The group’s strategic response to first half market conditions has been to preserve capital, reduce costs across the organisation and position ourselves to respond effectively to improved conditions,” he added.
As at 31 December 2011, there were 1,053 contracts on hand with a gross sales value of $278.7 million — which represents a 6% decrease in the number of lots under contract and a 3% decrease in the value of those lots when compared to 30 June 2011. Approximately 70% are due to settle before the end of the 2012 financial year.
Peet recorded 870 lot sales and 872 settlements for the first half, with sales down 26% and settlements down 22% on the previous corresponding period.
The group’s net EBITDA margin for the first half was 29% compared with 42% for the previous corresponding period. This was significantly impacted by the lower settlement revenue from higher-margin company-owned projects including Craigieburn and Greenvale in Victoria in particular.
At 31 December 2011, interest-bearing debt was $291.1 million and net cash totalled $57.1 million.
No dividend was declared for the first half, however Peet is expecting to pay a dividend in the second half.
Although Gore said factors such as the challenging domestic and global economic conditions and their impact on capital markets, will be taken into account when determining any final dividend for the 2012 financial year.
“Peet expects conditions to remain challenging throughout 2H12 as a result of continued pressure on the broader Australian economy, tightening credit markets and difficult property markets. However, Peet expects operating earnings for the 2012 financial year to be at the upper end of its guidance of $15 million to $20 million.
“A significant improvement in consumer confidence is the key to improved trading conditions in the residential market and, while sales volumes have improved since the interest rates cuts in late 2011, it is too early to determine whether the increases might be the start of a more positive trend.
“Consumer confidence remains fragile and the residential property market remains cautious as a result of high-profile job losses, most notably in the manufacturing sector; the ongoing threat of higher mortgage interest rates; and general cost of living pressures,” Gore concluded.
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