Weak sales in the first half of the financial year have resulted in Cedar Woods Properties’ profit decreasing in FY23, but the developer is reporting a strong start to FY24.
Cedar Woods today announced its 2022-23 results, reporting a $31.6 million net profit after tax, in line with its expectations and down from last year’s $37.4 million figure.
The company’s net sales dropped from 1,108 lots in FY22 to 694 lots in FY23 nationally, with Western Australia accounting for more than 50 per cent of its portfolio.
Presales were strong in Victoria, with 451 units sold, compared with 267 in WA.
Cedar Woods managing director Nathan Blackburne said this was because the company had a lot more built form products in the eastern states, which were more prone to selling off the plan.
“We have several major apartment, townhouse and commercial projects [in the eastern states] and they tend to experience presales a lot more than land subdivisions do,” he told Business News.
Mr Blackburne added that sales jumped significantly in the final quarter of FY23, particularly in WA.
“Most of the company’s Perth projects saw a notable increase in enquiry and sales,” he said.
“The standout projects in terms of sales in the final quarter were Rivergums in Baldivis, Eglinton Village and Ariella in Brabham.”
Cedar Woods purchased 86-hectares in Eglinton for $49.5 million in late 2021, and is part way through constructing a 1,200-lot community at the site, on the Yanchep train line.
The developer completed a 44-townhouse development in Subiaco this year, where it is also planning an 100-dwelling apartment building.
Mr Blackburne said the company held off delivering the apartment component of its Subiaco project, Incontro, until the availability of builders improved.
“We are expecting to launch that in about 12 months’ time,” he said.
He added that he was optimistic about the future of sale prices in WA, as well as the nature of the construction market.
“In WA we see considerable upside to the pricing across all product types, with WA remaining the most affordable state in the country,” he said.
“What this means is the impact of interest rates is lower at WA’s lower price points, [and] wages in WA are some of the highest in the country.
“We have high expectations for the performance of the WA portfolio towards the back end of FY24 but particularly in FY25.”
Mr Blackburne said Cedar Woods was “seeing improved availability of builders and significant moderation of costs across several materials categories”.
“We expect that trend to continue over FY24 as builders work through and complete current projects,” he said.
Cedar Woods’ share price was down 2.97 per cent to $5.23 at the time of writing.
