Shopping centre owner Westfield Group says it is looking beyond the current malaise in retail spending, pinning its hopes on its first foray into Italy and Brazil while the outlook for its US operations remain subdued.
Westfield on Wednesday reported a first half net profit of $650.9 million, down from $960.9 million in the previous corresponding six months to June 30.
The results were not comparable due to the restructure of operations last November when the group sold half is Australian and New Zealand malls into the newly created Westfield Retail Trust.
“We actually think this result and the transactions over the last two weeks shows the market the direction that we are going, the company’s US-based joint chief executive Peter Lowy said.
“It proves our long-term business plan strategy and shows the market that we can recycle capital and reinvest that in assets and transactions.
“We’ll be focused on actively deploying capital into those two markets and then we’ll see where we take it,” he said.
Westfield earlier this month spent $160 million to buy into a development site in the northern Italian city of Milan for a regional shopping centre.
A few days earlier it surprised the market by announcing the purchase of a 50 per cent stake in Brazilian group Almeida Junior Shopping Centers for $440 million.
Mr Lowy also said the group remained committed to selling about $2 billion worth of US shopping malls by the end of calendar 2011.
Westfield reported that it would meet its full-year guidance for earnings, distributions and revenue, confirming its 2011 full year forecast of between 64 and 65 cents per security.
Revenue was down 24.5 per cent at $1.36 billion, and earnings before interest, tax, currency derivatives and property revaluations were 26.8 per cent lower at $955.22 million.
Net property income increased by six per cent during the half year and a 50 per cent increase in the group’s management and development income.
Property income grew by eight per cent in England by one per cent in the United States and by 4.6 per cent in Australia.
Morningstar analyst Scott Courtney said the result revealed lower earnings per security than expected as the US portfolio “underperformed”.
“The development pipeline remains solid with $4.5 billion in projects under construction,” Mr Courtney said.
The company’s expansion into Brazil and Europe would be funded primarily from proceeds from the Stratford development in the UK while weakness in the US market was expected to affect the timing of the rationalising of the US portfolio.
Westfield declared an interim distribution of 24.2 cents per security.
The company said it was focused on investing in shopping centres with strong franchise characteristics that ware resilient through economic cycles.
The company remained tight-lipped about future expansion plans once its asset sales were completed.
Despite falls in the company’s security price this year, markets generally got the price right over the long term, Mr Lowy said.
Westfield Group securities closed six cents higher at $8.20, almost $2 lower than the group’s recent high at $10.16 in February.
