Stockland profit crashes, but residential sector profits rise
Property development giant Stockland have announced a drop in profit of nearly 70 per cent for FY19, however their residential sector saw an eight per cent rise.
It was devaluations in their retail town centre and retirement living portfolios.
The residential sector saw profits rise from $336 million to $362 million over the financial year through 5,878 residential lots settled, in line with their re-forecasted 5,900 settlements.
There were 3,869 residential contracts on hand over FY19.
Andrew Wilson, chief executive of communities, said the residential business has delivered a strong profit result despite a challenging market.
“In FY19, we’ve realised higher margins driven by the increased average price of lots settled in our Sydney and Melbourne projects, and we continued to gain market share over the year, as customers focus on the strength of our brand which is built on the quality and liveability of our communities.
Stockland have found enquiry has jumped in New South Wales and Victoria following the election.
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The majority of Stockland's residential communities are located in Queensland (41% of their portfolio) and Victoria (31%).
New South Wales only makes up 12 per cent of their residential community portfolio, even less than Western Australia who command 16 per cent.
New South Wales has a stronger standing in the retirement living portfolio however with 27%, only second to Victoria who have 39% of the portfolio.
During FY19 Stockland sold The Grove in Victoria and Merrylands Court in NSW to fund higher return projects.
Stockland managing director and CEO Mark Steinhart said Stockland are well positioned to benefit from an improving market, however they "expect conditions to take some time to normalise as customers continue to experience challenges achieving loan approvals."
Statutory profit for the year ended June 30 fell to $311 million from a profit of $1.03 billion the previous financial year.
Shares opened at $4.45 and have risen to $4.49 in early morning trading.