The land developer has recorded a 70 per cent profit boost, but says sales have been hampered by interest rate rises and construction delays.
Peet has posted a $35 million profit in the six months to December 2022, but says interest rate rises and construction delays have hit lot sales.
The ASX-listed land developer has released its 2023 half year results, revealing a net profit after tax of $35.1 million, up 70 per cent on the prior corresponding period.
The value of the company’s contracts in hand as of December 2022 were at $775 million, down from $930 million 12 months ago.
Peet managing director Brendan Gore said interest rates and slowed construction times were impacting the company’s biggest market segment, first home buyers.
“They’re not rushing out to buy, it’s always difficult in these markets,” he told Business News.
“It will correct itself once interest rates start to level out.
“Fundamentally, there’s a supply issue emerging across the country. We know that through rental stock, though the housing market, and the industry won’t be able to respond to that … but we’re really well positioned to respond to any improvement in activity.”
Peet has a pipeline of $13.3 billion of projects across 45 projects nationally, including 18 projects in WA, valued at $4.22 billion.
The company late last year received development approval to build 100 double-storey townhouses in Glendalough.
Mr Gore said Peet was keen to progress with that project, valued at $73 million in its half-year results, later this year, as it aligned with its focus in WA.
“We’ve got plenty of land in WA, but strategically we’re increasingly looking for townhouse and low-rise apartment product, which we’ve managed to put away a few acquisitions in the last 18 to 24 months," he said.
That’s where we see ourselves in WA in the short and medium term.”
Mr Gore said he believed the industry had seen the worst of the construction cost hikes and supply chains were normalising.
“I think we’re through the worst of it, it’s just [a matter of] how far does it pull back and what’s then normal,” he said.
“I think we’ll find out in the next 12 months.
“While sales and construction activity is at a low point, albeit off a high base, what that means is there’s going to be requirements for people to look for work.
“I expect to start to see that by the end of the calendar year.”
Peet’s shares remained flat at $1.12 at the time of writing, after trading at $1.14 earlier in the day.
