Developer and builder AV Jennings has experienced an 11.5 per cent fall in its total revenue and seen its profits halved as the fallout from the coronavirus pandemic weighs on new apartment completions.
AVJennings, led by Peter Summers, said its revenue dropped to $262.4 million over the fiscal year, with new found sales momentum hit hard by the earlier impact of bushfires compounded by Covid-19.
The 88-year-old Melbourne-based development company had seen a leap in pre-tax profit to $12.6 million in the six months to December but said in recent months Covid-19 had dried up sentiment and forced a 45 per cent drop in its annual profits.
AVJennings, which is majority-owned by Singaporean developer SC Global, said its original expectations for the fiscal year had not materialised, however it was pleased with the results achieved under the trying circumstances.
“Until March 2020 we were encouraged with the momentum and performance of the business, since then, 2020 has been incredibly challenging due to Covid-19,” Summers said.
“While the short term does remain challenging and uncertain, it is fair to say the residential market performed better than we expected during the March to June period and we have seen large parts of the Australian economy beginning to open up well ahead of early predictions.”
“Supported by initiatives such as HomeBuilder and other state schemes, we have seen a continuation of sales into the new financial year.”
The developer said apartment revenue was down 76.8 per cent from $56.7 million to $13.2 million, linked in part to the timing of project deliveries.
AV Jennings said its next apartment project, Empress in Melbourne’s Williamstown, had continued with construction throughout the lockdown and that pre-sales were performing “adequately”.
Growth in house and land revenue remained healthy over the year up 4.9 per cent to $246.4 million.
Its full-year accounts highlighted that the depressed consumer sentiment had rebounded in recent months with 86 contract signings in May and 97 in June, up from 57 in March and 51 in April, with some of the uptick driven by sales of parcels of lots to builders.
A total of 385 contracts were carried over at 30 June 2020, with a further 76 contracts signed in July 2020.
AV Jennings said it claimed $1.55 million under the JobKeeper program and moved staff to a four-day week.
Summers said if there had been one positive from the pandemic it had been the newly established level of cooperation between industry and governments.
“To date, the federal government in particular has shown a desire to play a strong role in our recovery and all governments have or are expected to announce significant public sector initiatives,” Summers said.
“Hopefully this continues into the future and allows for proper and much needed reform.”