Finbar Group's interim profit falls 51%

Property developer Finbar Group has suffered a 51 per cent drop in its interim net profit result but has maintained its full-year forecast, expected to be in excess of last year's record $12.2 million result.

In its interim report released late yesterday, the company reported a net profit for the first half of fiscal 2009 of $3.9 million, down from the previous corresponding period's $8 million.

The South Perth-based company said the effect of hedging costs, amounting to a $2.9 million reduction in the interim profit result, will be written back on completion of the project facilities.

Basic earnings per share fell from $5.89 to $2.80 while revenue dropped from the previous year's $52.1 million to $8 million.

Finbar acknowledged the continued softening in the Perth real estate market during the reporting period which has slowed the sales campaigns on some of its projects, including The Edge in Victoria Park where 25 out of 75 lots have so far been sold.

"The company will seek additional sales before our own internal risk target has been reached and construction for this residential project can commence," it said.

"Notwithstanding these conditions, the company currently has $455 million in pre-sales for projects under construction and in various stages of completion which will help insulate our financial results from the effects of this downturn for FY 2009 and FY 2010."

The company added that while a number of its competitors' inner city projects are not proceeding, there is still demand for products in the area.

"..we believe the resulting reduction in future supply will ultimately support values for existing apartments and provide opportunity for new product such as that which we can produce from our wholly owned Fairlanes site and our joint venture on the former ABC site in Adelaide Terrace."

Finbar has forecast its full year profit guidance for fiscal 2009 to be over the $12.2 million recorded last year, provided economic conditions do not deteriorate further.

The company has declared a fully franked interim dividend of two cents per share.

Shares in Finbar were down two cents to 55c at 15:05 AEDT.