Scentre Group (ASX: SCG) boss Peter Allen is stepping down as CEO of the country’s biggest retail landlord which yesterday revealed solid results for its 2021 financial year.
Mr Allen will be replaced in an internal succession by Scentre’s chief financial officer, Elliott Rusanow from October 1
Mr Allen will end eight years at the top of the company that has ended with the difficult years of COVID uncertainty from 2020.
Scentre reported strong uplift in funds from operations in 2021- the key earnings measure in the property sector – to $862.5 million for the full year to December or 16.64 cents a share, a rise of 12.7%.
Full year profit was $845.8 million or 16.32 cents a security, which included small property revaluation gains of $81.2 million.
Its distribution of $738.7 million for the year was equivalent to 14.25 cents per security, topping its guidance and a hefty 103.6% increase on 2020 when it was still grappling with the financial impact of the first round of the Covid pandemic
Scentre Group said that its investment in Westfield Mt Druitt is “progressing well”. The group noted that the $55 million rooftop entertainment, leisure and dining precinct is fully leased and on track to open next month.
Scentre has also started a $33 million upgrade at Westfield Penrith. It says the project will result in “a large-format entertainment offer and upgrades and additions to the centre’s vertical transport systems” (lifts and people movers).
Looking to the future, the company says it is focused on “driving customer visitation, engagement and occupancy in order to deliver earnings growth in 2022 and future years”.
As a result it is looking to distribute at least 15 cents a security for 2022, which would be growth of around 5% over the 12 months from the 14.25 cents a security distributed for 2021.
“Earnings are expected to grow at a higher rate in 2022” the company says, and it also notes that it remains on track to achieve at least 50% of its net zero emissions target by 2025.
For some reason investors didn’t like the report and sent Scentre securities down 4.4% to $3.02.
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Meanwhile Stockland (ASX: SGP) securities jumped more than 3% on Wednesday after it revealed it had rid itself of its aged care business for nearly a billion dollars and managed a sharp rise in first half statutory profit of $850 million thanks to more than half a billion dollars in commercial property valuation gains.
Stockland said its statutory profit rose from $339 million in the depressed December 2020 half when property devaluations were more the norm for companies in the sector.
These latest revaluation outcomes reflect improved activity levels (and outlook) for food-based and essential retail assets (such as those owned by Stockland) and interest in the logistics assets (as Goodman group and GPT have both confirmed in their most recent financial results).
The company declared an interim distribution of 12 cents per security.
Stockland reported funds from operations (FFO) – the best performance measure for property groups – of $350 million and FFO for each security of 14.7¢, which were both down by 9.3% relative to the previous corresponding period.
Stockland generally expects a stronger second half than the first and 2021-22 seems to be no different with the company explaining on Wednesday that it expects FFO to be more heavily skewed to the second half of this financial year, due to the timing of residential settlements, previously contracted retirement living non-core village disposal profits, and COVID-related tenant assistance.
Stockland CEO Tarun Gupta, who replaced Mark Steinert last May said the solid operational performance delivered in the first half “provides us with good earnings visibility for the remainder of the financial year, notwithstanding the broader market uncertainty brought about by the ongoing COVID-19 pandemic, elevated input cost inflation, and interest rate volatility”.
“Accordingly, we are tightening our FFO per security guidance range,” Mr Gupta said to 35.1-35.6 cents from the 34.6c-35.6c estimate in October, 2021.
“Current market conditions remain uncertain. All forward-looking statements, including the full-year earnings guidance, remain subject to no material deterioration in current market conditions and the continued easing of COVID-19 restrictions,” he added.
Meanwhile Stockland said in a separate statement that it had raised $987 million in the sale of its retirement business.
The company said in the statement that the new funds will be used for higher growth operations, including the booming industrial sector and to “refocus the communities business”.
The disposal price represents a 1.9% discount to Stockland’s December 2021 book value of $1 billion.
Under the terms of the agreement, EQT Infrastructure will acquire Stockland’s portfolio of 58 established Retirement Living villages,10 development projects underway and in planning, along with the associated management platform.
As a result of the transaction, over 300 employees will transfer to EQT.
“I am delighted that we have found a strong Retirement Living owner and operator to acquire Stockland’s Retirement Living platform,” Mr Gupta said.
“EQT is a purpose-led organisation with a well-established track record in healthcare, aged care and retirement living. We are confident that EQT will be the right custodian for the residents and employees, and are well-placed to support the continued growth of the high-quality Retirement Living platform.”
Stockland securities ended at $4.16, up 3.4%. There’s nothing like a pot of cash from an asset sale to swell the expectations of investors for a fat capital return of some sort.
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Finally, logistics software company WiseTech Global (ASX: WTC) has surprised with a solid upgrade in full year earnings estimates after reporting a sharp rise in interim revenue, earnings and dividend despite having to deal with volatile supply and logistics chains.
In fact from comments in the statement on Wednesday, CEO Richard White sees the company benefiting from the current volatility and shake up in logistics that many other companies, such as retailers and manufacturers which are complaining about the impact of higher costs and staffing troubles from the current uncertainty.
The company told the ASX on Wednesday that operating profit jumped 75% to $107 million for the six months to December and as a result it will pay an interim dividend of 4.75 cents a share, up 76% from the 2.70 cents a share paid for the December, 2020 half.
The sharp rise in earnings came on the back of a more sedate 18% rise in revenue for the latest half to $281 million.
While directors reiterated guidance for full-year revenue growth of between $600 million and $635 million, they upgraded full year guidance for earnings before interest, tax, depreciation, and amortisation (EBTIDA) from a maximum of $285 million up to a possible $295 million.
The shares ended up 4.2% to $44.58 at Wednesday’s close.
Much of its growth was driven by its flagship CargoWise software, which saw an almost $50 million revenue jump, excluding foreign exchange adjustments, while revenue from customers on platforms that WiseTech has previously acquired dropped by $700,000.
WiseTech attributed its strong CargoWise performance to existing customers signing up for new seats, sites and features as well as industry consolidation, a pricing change and increased adoption of the software from new clients.
CEO White said in a statement with the results, “The ongoing growth of eCommerce and strong demand for goods, coupled with the challenges posed by outbreaks of new COVID variants, has resulted in continued capacity constraints, port congestion, supply chain labor shortages and higher freight rates.
“From WiseTech’s perspective, whilst higher freight rates do not result in immediate revenue growth, we are benefitting from the acceleration of the longer-term structural changes they are driving.
“In particular, we are seeing increased investment by logistics companies in replacing legacy systems with integrated global technology, such as CargoWise, to drive productivity, and facilitate planning, visualization and control of global operations.”
We are also seeing continued consolidation within the logistics sector. Over the past two years Top 25 Global Freight Forwarders such as DHL, DSV, CEVA Logistics, Kuehne + Nagel and JAS Worldwide have embarked on acquisitions with consolidation activity intensifying in the second half of calendar 2021,” Mr White said.
WiseTech said the attrition rate for customers leaving CargoWise remained very low, at less than 1%.
At the same time, the company says its on track to reduce its costs by $45 million for the 2022 financial year, extracting more efficiencies than its previous target of $40 million.
The company said its financial position is robust. “Cash as at 31 December 2021 was $380.3 million (with no outstanding debt excluding lease liabilities). The Company has an undrawn, unsecured, four-year, $225 million, bi-lateral debt facility supported by six banks, providing it with a solid financial foundation for future growth.”
