Stockland profit up, but WA a challenge
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National developer Stockland is expecting another year of solid growth after booking a 50 per cent rise in net profit for the first half of the 2016 financial year, but it’s not likely any of that growth will come from Western Australia.
Stockland offered a pessimistic view of land development conditions in the west in its half-year presentation to investors today, with weak employment growth and migration out of the state expected to keep sales volumes at low levels over the second half of the financial year.
The developer said it expected price pressures over the next six months, following a 22 per cent reduction in sales in WA for the first half of FY2016.
Nevertheless, Stockland expects to build on its statutory profit of $696 million from the first half of FY2016, on the back of a strong development pipeline in key growth markets, particularly in New South Wales, Victoria and Queensland.
Stockland’s residential division delivered an operating profit growth of 45 per cent, compared to the first six months of FY2015, while its commercial division was up 3.8 per cent and retirement living was up 9.2 per cent over the same period.
Stockland managing director Mark Steinert said the company’s strong result reflected its commitment to its growth strategy.
“We continue to grow asset returns through active asset management and project commencements and we’re growing our customer base with more diverse products across all asset classes,” Mr Steinert said in a statement to the ASX.
“In our residential business, we capitalised on favourable market conditions in Sydney and Melbourne, ending the half with a record number of contracts on hand.
“We’ve activated a high proportion of our residential land bank and we have sufficient depth to our projects in high demand corridors to underpin future organic growth.”
Mr Steinert said he expected the company to achieve 6.5 per cent to 7.5 per cent earnings per share in FY2016, with a 24.5 cents per share dividend expected to be paid at the end of the financial year.