Domain executive chairman Nick Falloon has insisted the newly listed real estate advertiser is in “great shape” despite the absence of a chief executive and an 8.1 per cent drop in half-year profit.
Underlying profit for the six months to December 24 fell on a pro forma basis to $24.7 million, dragged down by costs associated relating to the company’s spin-off from Fairfax Media.
Domain also reported a statutory loss of $3.4 million but revenue rose 62.3 per cent to $112.7 million, driven by a more than 19 per cent rise in revenue from residential listings.
Mr Falloon, who stepped in to run Domain following last month’s surprise resignation of Antony Catalano, said the business has reported a “pleasing” first result since its separation from Fairfax in November.
“It demonstrates the strength of Domain as a separately listed company and the ongoing success of its strategy,” Mr Falloon said in a statement on Monday.
“The business is in great shape with strong underlying momentum.”
Pro forma underlying revenue was up 12.5 per cent at $183.3 million, while pro forma earnings before interest, tax, depreciation, and amortisation grew 8.7 per cent to $56.8 million.
But total listing volumes over the six months dropped two per cent, according to Domain.
The company expects 2018 full-year pro forma costs to be 12 to 13 per cent higher than 2017’s $216 million.
Citi analysts said Domain’s results were solid but warned early trading for the second half looked soft.
Domain reported a 21 per cent rise in digital revenue in the first seven weeks of the second half of the year and total revenue growth of 11 per cent.
“Digital revenue growth will need to accelerate to +25 per cent from here if Domain is to hit our FY18 estimates of 22 per cent for FY18 digital revenue growth,” Citi said.
Mr Falloon also reiterated the search was underway for a new chief executive to replace Mr Catalano, who stepped down just two months after Domain listed on the Australian Securities Exchange.
“We expect the new leader to have execution discipline and relevant experience in driving a growth business and building a great culture,” Mr Falloon said.
“The calibre of the candidates that we are attracting is truly impressive, befitting Domain’s position as a leading real estate media and technology business.”
Mr Falloon said the former CEO’s departure had had no affect on Domain’s relationship with agents.
“We have very strong relationships with all of our agents across the country and we do not see any impact on that going forward,” Mr Falloon said.
Domain’s shares were up 13 cents, or 4.2 per cent, at $2.99 at 1328 AEDT.
COMPANY COSTS WEIGH ON DOMAIN’S H1
* Underlying pro forma profit down 8.1pct to $24.7m
* Statutory loss of $3.4m
* Revenue up 62.3pct to $112.7m
* Partially franked interim dividend of four cents