Australand Property Group says it’s well-placed to deliver on its earnings guidance in fiscal 2011 after the developer posted a 17 per cent first half profit in testing conditions.
Chief executive Bob Johnston says driving earnings from the group’s development divisions remains a “core focus” despite the slowdown across the economy.
“We do remain on track to deliver on our target returns by the end of 2012,” he told analysts in a briefing.
He added the group’s investment portfolio was well positioned to provide “quality earnings”.
“Our industrial portfolio is fully occupied and given the limited supply and low vacancy rates for prime assets we expect rents to continue to grow at least in line with CPI,” Mr Johnston said.
He said the group’s office portfolio was now almost completely weighted to the Sydney and Melbourne markets, which both had a “solid outlook” for rental growth.
Australand reported net profit rose 17 per cent to $84.78 million in the first half, up from $72.22 million in the previous first half to June 30, 2010.
It also said operating profit after tax rose seven per cent to $64.89 million, up from $60.43 million in the previous corresponding period.
Economic conditions and sentiment softened in the first half of 2011, particularly in the second quarter as consumers remained cautious due to higher utility and petrol prices, as well as mortgage rate increases, the group said.
“The positive impact from activity in the resources sector is yet to be felt in most other parts of the economy and, consistent with this, the group remains cautious in its outlook for the remainder of 2011, but well-placed to deliver on … guidance,” Australand said in a statement.
Full year earnings guidance is expected to be in line with 2010, with the sale of assets to the GIC logistics joint venture in June.
Australand expects customers to remain cautious in committing to new space requirements in the near term, but it anticipates improving demand in the second half and into 2012, on low vacancy rates in both the office and industrial sectors.
An interim distribution of 10.5 cents per stapled security will be paid on August 4.
The group expects to pay a further distribution of 11 cents per stapled security for the second half, resulting in full year distributions of 21.5 cents per stapled security, or around five per cent growth on 2010, in line with previous guidance.
The residential division is expected to produce sales in the second half and to deliver a 20 per cent increase in sales volumes for the full year.
Australand’s stock closed four cents lower, or 1.5 per cent, at $2.62 on Wednesday.
