Victorian focus helps local developers

PEET and Cedar Woods have continued to be the pick of the bunch among Perth’s listed property developers, with both companies’ half-year results boosted by their exposure to the relatively strong Melbourne market.

Maintaining low debt levels was another theme that bolstered Peet and Cedar Woods, which either maintained or increased their interim dividends.

Apartment developer Finbar reported a dip in net profit but with a strong balance sheet and a healthy pipeline of work, was also able to lift its interim dividend.

In contract, developers Port Bouvard and Axiom Properties needed to focus on debt reduction.

For the half-year to December 31, Peet reported a 2 per cent increase in net profit to $22.2 million, which the residential development group said was a solid result.

Peet completed 1,179 lot sales across 27 projects over the half year, down from 1,407 in the previous corresponding half, because of planning and approval delays and the withdrawal of first homebuyers.

“However, the reduction in the number of sales was, in part, offset by a 7 per cent increase in the weighted average price of lots sold during the half,” Peet said.

The group said one of its key strengths was having one third of its land bank in growth corridors in the “more robust” Victorian market.

Its second half outlook was underpinned by having 1,248 contracts on hand worth $311 million at December 31 2010.

Cedar Woods said the WA market was steady, while in Melbourne “strong sales and development activity continued in the first half”.

“A significant number of development projects were completed during the first half and Cedar Woods is confident that $30 million in pre-sales already in place will underpin second-half earnings,” the company said.

Based on a strong rise in first-half profit, the company is now forecasting a full-year net profit of $27 million, an increase of 57 per cent.

“With a diverse portfolio of projects, the necessary approvals in place and ample funding, Cedar Woods is well placed to comfortably exceed its 10 per cent per annum growth target in coming years, assuming reasonable market conditions,” managing director Paul Sadlier said.

Apartment developer Finbar reported a fall in attributable net profit to $12 million, and expects to achieve full-year net profit of $23.5 million.

The group lifted its interim dividend to 3 cents per share.

Most of its revenue was from completion of the Edge Apartments and adjoining Gateway office building in Victoria Park. Looking ahead, its main revenue source will be the X2 apartment project in East Perth.

Diploma Group and Aspen Group both reported a slump in interim profit, with Aspen adversely affected by asset impairments and Diploma by slow sales and construction delays.

Following last year’s major balance sheet restructuring, Port Bouvard returned to the black, with a net profit of $6.5 million.

The bulk of its revenue was from sales at the Oceanique apartment project south of Mandurah, where it has discounted prices to bolster sales volumes.

Axiom Properties also returned to the black, with a net profit of $148,000 after selling part of its interest in the Gepps Cross bulky goods centre in South Australia.

The proceeds enabled Axiom to remedy a breach of its banking covenants.

The group’s main focus was progressing its 24-hectare Islington Rail-yards redevelopment in Adelaide.