Market headwinds and an “atypical skew” of residential profits to the second half of 2019 has Stockland reporting a significant hit to its half-year statutory profit, declining 56.2 per cent to $300 million.
Stockland chief executive Mark Steinert told investors that the results were in line with expectations, but challenging conditions will limit full-year earnings growth to the lower end of its guidance.
Steinhert said the group expected to deliver FFO per security at the lower end of its forecast 5-7 per cent.
“The housing market has moderated overall and we expect this to continue in the year ahead,” Steinert said.
“We expect further price declines in residential land of around 5 per cent over this calendar year, concentrated in Sydney and Melbourne.”
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Stockland’s residential operating profit was down 21.8 per cent over the year, while its “less volatile” retirement living portfolio reported an 8.3 per cent increase to $20 million.
Despite recent concern that Stockland will experience increasing cancellation rates, Steinert said its residential settlements were in line with expectations and that cancellation rates would remain below the long-term average.
“In spite of reduced credit availability and investor tax policy uncertainty, factors such as growth in underlying owner-occupier demand, government policy support for first home buyers, generally balanced supply and resilient economic conditions support confidence in the masterplanned community market which is 85 per cent of our business,” Steinert said.
Steinert said that the group’s profit resilience strategies were focused on innovation and technology and pointed to the incorporation of AI, data analytics and a recent proptech partnership as positioning its “business for the future”.
Stockland reaffirmed its full-year distribution of 27.6 cents, a 4 per cent increase on financial year 2018.
Stockland's share price closed out 2.4 per cent lower after the release of its half-year results on Tuesday.