Peet profit up despite market headwinds

Land developer Peet has shrugged off moderating sales volumes in Western Australia over the first half of FY2015 to lift its profit by 30 per cent compared to the previous corresponding half year.

Peet today said its net profit for the six months to December 31 was $17.1 million, up from $13.2 million in the first six months of FY2014.

Revenue was up 76 per cent to $182.8 million.

Managing director Brendan Gore said the result was a pleasing performance despite varying market conditions across Australia, flagging further growth in the second half of the year.

“Overall, property market fundamentals remain sound, however there has been a moderating of sales and stabilising of prices in the WA market, following a period of strong price and volume growth,” Mr Gore said.

Total sales for the half year were 1,610 and 1,456, respectively, slightly lower than in the first half of FY2014.

At December 31, Peet had 2,232 contracts in hand, with a gross value of $485 million, compared to 1,990 contracts at June 30.

“Peet has a well-diversified national portfolio and there were improved sales and settlements results in Victoria and Queensland and moderate price growth in key markets,” Mr Gore said.

“A highlight of the first half was the acquisition of interests in six high-quality, strategic residential development projects and the associated equity raising of approximately $51 million.

“Three of the projects were acquired jointly with key investment partners, providing the group with the opportunity to further leverage and grow its funds management business, with the two largest projects already in production and selling.”

Mr Gore said he expected WA estates to provide a solid performance in the second half of the year, with continued population growth, relatively low levels of unemployment and the diversity of the developer’s land bank to be the main driving factors.

He also flagged increased activity in Queensland and Victoria.

“Peet has moved into the second half of FY2015 in a good position to maximise growth opportunities, with strong relationships with our institutional partners, good support from builders, a stronger balance sheet and expectations of continued good performance in most key markets during 2H2015,” Mr Gore said.

Peet will pay an interim dividend of 1.5 cents per share.