The success story of Australia’s Goodman Group continues, as confirmed by its financial results for fiscal year 2019, which were released last week.
In the twelve months ended June 30, 2019, the industrial property developer saw operating profit rise 11.4% to A$*942.3m from A$845.9m one year earlier, outpacing its growth rate (+9%) between fiscal 2018 and fiscal 2017.
(As the group says, operating profit is adjusted for property valuations, derivative and foreign currency mark to market and other non-cash or non-recurring items.)
Its diluted earnings per share (EPS) similarly grew at a double-digit clip, while revenues rose 13.2% to about A$3bn and its dividend per share (DPS) was up 7.1% on a comparable annual basis.
Chief Executive Officer Greg Goodman said that “strategic focus on owning, developing and managing high-quality industrial properties for customers in key urban centres is delivering positive results, with operating and statutory profit up significantly,” surging 48.2% to A$1.62bn annually.
Its expansion plan – which is intimately tied to Amazon’s push in e-commerce – is on a roll. “Our development workbook is consequently growing strongly”, Mr Goodman added, and that showed in work in progress at “A$4.1bn and expected to reach around A$5bn in the next 12 months.”
Moreover, the group has raised and deployed additional capital in partnerships to fund developments, which “combined with solid property fundamentals, has led to robust partnership returns, averaging 16% for the year” – this is consistent with its stated track record of 16.4% over the past five years.
The group and partnerships recorded A$3.8bn in “valuation gains”, contributing to substantial growth in assets under management (AUM), which reached A$46bn at the end of June, against A$38.3bn AUM last year and A$34.6bn AUM one year earlier.
Total AUM are expected to increase steadily through development completions.
Notably, a strong focus on key urban areas has led to high occupancy and rental growth, which were favoured by an undersupply of quality assets in prime locations as well as declining bond yields, rising land values and an increasing appetite for industrial real estate by investors.
For its current fiscal year, it is targeting a 10.4% growth rate in operating profit (to A$1.04bn), while its operating EPS is expected to grow at 9% to 56.3 cents. Its projected DPS is unchanged annually.
Finally, gearing almost doubled to 9.7% from 5.1% in fiscal 2019, with the company saying that at the end of June it had “remained low at 9.7% and the funds available to the group for investment were A$2.7bn”.
(As it notes, “gearing” is calculated as total interest-bearing liabilities over total assets, both net of cash and the fair values of certain derivative financial instruments included in other financial assets, while total interest-bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities.)
Source: Transport Intelligence, August 27, 2019
Author: Alessandro Pasetti
* $ = A$1.39 / € = A$1.60
