Goodman Group today announced its results for the half year ended 31 December 2017, delivering an operating profit of $421.3 million, up 8.5% on 1H FY17 and operating earnings per share (EPS) of 23.3 cents, up 7.9% on 1H FY17.
The Group has upgraded its forecast FY18 EPS to 46.5 cents, up 8% on FY17, with forecast full year distribution of 28.0 cents per security, up 8% on FY17.
Goodmans' deliberate strategy to reposition the Group’s operations and balance sheet to deliver strong sustainable growth over the long-term continues to pay dividends. In the last five years, Goodman have sold over $11 billion worth of assets to focus on core markets, moved 80% of the $3.5 billion development workbook into Partnerships and reduced gearing from 19.4% to 6.4% –and delivered 7.6% p.a. EPS growth over this time.
Goodman anticipate higher growth across their underlying businesses resulting in higher EPS. Investment earnings are expected to grow as the higher quality portfolio delivers strong rental income. Management earnings will be driven by net investment, growth in assets under management and performance fees, and development should benefit from strong demand in our core markets.
Key highlights for the period are:
Operating profit of $421.3 million , up 8.5% on 1H FY17
Operating earnings per security (EPS) of 23.3 cents, up 7.9% on 1H FY17
First half distribution of 13.75 cents per stapled security, up 8.3% on 1H FY17
Net tangible assets of $4.38 per security, up 4%
Statutory profit of $542.7 million
Total assets under management (AUM) of $34.6 billion with external AUM increased to $31.1 billion, despite asset sales
Transacted over $3.0 billion of asset sales in 1H FY18 completing an $11 billion sales programme
Valuation uplift of $1.2 billion across the Group and Partnerships reflecting both reduction in cap rates to 5.7% and net property income (NPI) growth of 3.0%
Development activity of $3.5 billion, now 80% undertaken within Partnerships
Group gearing remains low at 6.4% with $3.3 billion of liquidity available predominantly in cash
Significant reduction in weighted average cost of debt to 2.4%
Upgrade FY18 forecast operating EPS to 46.5 cents, up 8.0% on FY17
Forecast full year distribution of 28.0 cents per security.
The outlook for industrial real estate continues to be positive as the macro trends impacting the sector continue unabated. E-commerce and technological solutions are driving change in all forms of consumer service fulfillment, and will continue to transform supply chain and space requirements.
Goodman has deliberately repositioned the business over the last five years by:
concentrating the portfolio in gateway cities
diversifying and extending funding sources and reducing financial leverage
transitioning development activity into the Partnerships
scaling up international operations.
Goodman see an increasingly shift towards multi-storey industrial facilities or changes of use to commercial and residential. Goodman is well placed to benefit from this growing trend. Given the strong first half performance and sustained momentum into the second half, forecast FY18 operating EPS has been upgraded to 46.5 cents (up 8% on FY17) with forecast full year distribution of 28.0 cents per security (up 8% on FY17).