Retirement village operator Metlifecare has reported a record profit for its year to June, underpinned by unit resale gains and much improved village development margins.
The value of Metlifecare’s assets grew 14% to $3 billion.
Metlifecare completed 235 new units and care beds, more than doubling last year’s number, and its development profit margin rose from 13% last year to 23%, chief executive Glen Sowry said.
Revenue for the year grew 8% to $370.5 million. Earnings before interest and tax (ebit) were up 7% to $261.5 million and reported after-tax profit gained 10% to hit a record $251.5 million.
Underlying profit, which strips out unrealised gains in asset values, rose 24% to $82.1 million.
Mr Sowry said the company was ‘‘well on track’’ to hit the full-year 2018 target, which is 233 new units and care beds.
Debt had been reduced by 10% to $76.4 million, which, based on banking loan to value ratio restrictions, was 4.5%, well below the banking LVR maximum of 35%.
Mr Sowry said that provided ‘‘significant headroom’’ to fund future development growth.
The final dividend of 5.8c per share brought the full year to 8.05c. Metlifecare’s shares rose 2.2% to $6 following the announcement.
Craigs Investment Partners broker Peter McIntyre said it was a ‘‘solid result’’.
The $82million profit was in line with Craigs’ estimates and ahead of management guidance for about $77 million.
‘‘The company did benefit from a stronger Auckland housing market, but less than we anticipated, with resale margin expansion being offset by a decline in resale turnover,’’ he said.
However, the weak turnover of resales for 2017 set up Metlifecare for a reasonable full-year 2018 result as the number of resales returned to normal.
He said the company had changed its dividend policy and intended to increase dividend payments annually, and should be able to deliver on that ‘‘in the medium term at least’’.
Forsyth Barr broker Lyn Howe said new sales volumes were below expectations, at 129 units versus 182 units forecast.
‘‘Metlifecare noted that new stock delivery was skewed to late in the period and sales have slipped into full-year 2018.’’
She said resale volumes were also lower than expected, at 349 units against 379 forecast, but that appeared to simply reflect stock availability, not a slowing of demand.
Mrs Howe said there were medium-term positives ahead as the market gained confidence in Metlifecare’s ability to execute on developments, and if it could demonstrate it could capitalise on the growth potential in the sector.
‘‘A risk factor for Metlifecare is that its villages without care operations are more exposed to a softening in the housing market,’’ Mrs Howe said.
