Real estate developer, Australand Property Group, has reported a 34 per cent lift in first half profit, following strong performances in its commercial and industrial and investment property arms.
Net profit for the first six months of calendar 2007 rose to $119.596 million, from $89.256 million in the same period last year.
The company is not expecting a significant rise in earnings for the full year before unrealised gains are taken into account.
In fact, Australand expects to achieve a distributable profit (profit after tax and minority interest but before unrealised revaluation gains) for the 2007 financial year in line with the prior year.
"This should ensure that profits will support total Dividends/Distributions of 16.5 cents per stapled security for the full-year ending 31 December 2007," the company told the ASX yesterday.
But Australand's Acting CEO, Mr John Thomas, said the improved performance across all operating Divisions and a quality investment portfolio, supports the expectation that the full year 2007 reported profit after tax and minority interest (including unrealised revaluation gains) "should show an improvement over the previous financial year".
So the company is depending on those unrealised capital gains to be a big earnings driver once again.
In 2006, Australand recorded a net profit of $243.1 million, which was up 20.9 per rise on the previous year. So in effect, the company is saying no significant growth in the second half, and certainly nothing from housing where the company has been winding back its exposure.
The shares reflected that lack of growth with a flat performance yesterday, rising 2c to a high of $2.32, before retreating to end around 4c down at $2.26. That was 14c shy of the 52 week high of $2.40.
Total revenue fell one per cent to $556.936 million, from $561.395 million.
Earnings per stapled security rose a quarter to 12.9 cents from 10.3 cents and the distribution per stapled security was steady at 8c compared to the same period of 2006.
Australand said profit from its commercial and industrial arm rose 55 per cent to $24.1 million, while the "aggregate sales revenue for the half year was $243.2 million, which comprised revenue of $177.4 million from wholly owned projects and $65.8 million from joint venture projects".
The investment property business was the main driver with profit up by 36 per cent to $118.5 million and ALZ says the division is on track to deliver "another improved performance for the financial year ending 31 December 2007".
The result was boosted by an unrealised capital gain of $56.1 million, up 43% on the $39.1 million in the first half of 2006.
Profit from the residential property division, which used to be the company's main area of business, edged up 5% to $34.3 million in the six months.
"The result was a reflection of strong Perth and Melbourne residential markets and an improved Brisbane market," the company said.
"The Sydney market remained subdued, however there are early indications of a rise in consumer sentiment towards property." But the company expects this market to remain subdued for the rest of the year.