This article is from the Australian Property Journal archive
Home builder Simonds Group is pivoting into the medium density and the government-backed affordable housing market.
Simonds announced the diversification of its business during its first half year announcement, where it delivered a net profit after tax of $1.9 million in the six months to December 2024, down from $2.5 million in the previous corresponding period.
Group revenue was $318.1 million (2024: $337 million) and earnings before tax depreciation and amortisation (EBITDA) was $13.6 million (2024: $12.4 million).
No dividend was declared for the period.
CEO David McKeown said revenue during the period was impacted by softer demand and reduced site starts given the delay in the return of residential sales growth in Victoria.
Starts within the insurance channel have reduced because of lower demand, with the business pivoting to alternative strategic initiatives that sustains long-term growth and profitability.
“We are pleased to report a strong performance in the first half of FY25, achieving a $1.5 million EBITDA growth from continuing operations despite a challenging macroeconomic environment,” he added.
McKeown said the impact of the lower volumes was offset by higher site start values and improved margins on jobs going to site.
Meanwhile the group remain well capitalised with available liquidity of $32.4 million as at 31 December, comprising of $7.8 million cash on hand and unused banking facilities of $24.6 million.
Recently Simonds announced the acquisition of its rival Dennis Family Homes.
McKeown said the acquisition will deliver significant long-term value and further solidifies the group’s competitive position in the market.
“We remain committed to investing in capabilities that diversify our revenue streams, particularly our alternative sales channels. This will help drive sustainable growth and aligns with our ongoing focus on cost efficiency and adaptability in an evolving market. Although the residential market in Victoria continues to face affordability challenges and subdued consumer confidence, we are confident that our strategic approach will position us well for long-term success,” he continued.
The Dennis Family acquisition comes as Simonds also announced that it is investing in alternative sales channels and expanding its designs and capability to deliver medium density, affordable housing and small lot products.
McKeown said government-backed housing initiatives offer potential opportunities in the affordable housing sector, which is an emerging business opportunity for homebuilders as the federal and state governments across Australia aim to boost housing supply.
Last year, a consortium comprising Japanese-owned and Australia’s biggest home builder Metricon, National Affordable Housing, KDL Property Group and ANZ, won a bid to deliver 500 affordable homes in Queensland.
The NSW government recently proposed to deliver 500 affordable apartments for essential workers in Camperdown via Landcom.
