Property group Mirvac has reported a fall in half-year profit but maintained full-year guidance, saying its results will be affected by residential settlements weighted heavily towards the second half of the year.
Mirvac’s profit for the six months to December 31 was $465 million, down eight per cent on the same time a year earlier, while revenue was down 28 per cent to $984 million.
Managing director Susan Lloyd-Hurwitz said 2,600 residential settlements, out of a total 3,400 for the year, will occur in the second half of 2017/18, heavily skewing residential earnings, which were down 49 per cent to $35 million in the first half.
“We remain confident in our ability to deliver operating earnings growth of between six and eight per cent in FY18,” Ms Lloyd-Hurwitz said in a statement.
Residential defaults for the first-half remain below the historical average at two per cent.
Ms Lloyd-Hurwitz said while apartment sales are moderating in Sydney and Melbourne, demand for well-located stock remained strong.
Mirvac on Thursday also announced plans for an on-market buyback of up to 2.6 per cent of the group’s issued securities.
Mirvac’s chief financial officer Shane Gannon said the buyback, expected to begin on February 23 and to remain in place for 12 months, will enhance returns to Mirvac security holders.
Commenting on other parts of the Mirvac portfolio, Ms Lloyd-Hurwitz said retail conditions remain challenging but the company was maintaining high retail occupancy rates at around 99.4 per cent and had increased sales productivity across its retail space.
The group’s office portfolio, focused on high-quality stock in Sydney and Melbourne, is also starting to deliver growth in operating income at around 10 per cent for the half, Ms Lloyd-Hurwitz said.
Mirvac shares were 1.5 cents, or 0.7 per cent, higher at $2.065 at 1426 AEDT.
RESIDENTIAL DELAY WEIGHS ON MIRVAC HY18 PROFIT:
* Net profit down 8pct to $465mln
* Revenue down 28pct to $984mln
* Final dividend 5.0cps, unfranked