Mirvac posts strong profit despite tough residential market

Mirvac’s results for the financial year to June 30, 2019 announced a strong performance despite challenging conditions in the retail and residential markets.

The diversified property group posted a profit of over $1 billion for the fourth year running, largely thanks to its office revenue coming in 72 per cent higher than the previous financial year, which made up for its fall in residential revenue.

GALLERY  

However, its net profit was down from a year earlier, at $1.02 billion compared to $1.09 billion in June last year.

The company took a hit to its earnings from residential building, which fell 34 per cent from the previous year to $201 million.

Mirvac’s strategy to offset slow settlements in its residential portfolio by leveraging office assets has been led by chief executive Susan Lloyd-Hurwitz.

“The strength and resilience of our business were evident throughout the year. While recent months have seen some potential signs of recovery, there is no doubt the housing market deteriorated throughout the financial year,”  Lloyd-Hurwitz said.

“However, averages mask the significant variations between sub-markets. They also ignore the superior quality of the Mirvac offering.”

Mirvac is now Australia’s second-largest office manager, with $15 billion of assets under management.

Mirvac’s pipeline of commercial developments has an estimated end value of more than $2 billion.

Ms Lloyd-Hurwitz also said confidence in Mirvac units remained strong, despite a defects crisis in NSW leading buyers to question the quality of apartments.

“All the forward indicators are turning green … but people are concerned about job losses. There is a general fear of the impact on financial obligations if you are fearful of job losses,” Susan Lloyd-Hurwitz said.

“There is also the difficulty of getting finance. There are still a tight, difficult financing conditions … it will turn. We are not calling an immediate recovery right now; we would like to see some sustained recovery and hopefully some moderate price recovery,” she said.

After the company forecast it would increase earnings between three per cent to four per cent in the coming year, Mirvac stock surged 21¢, or 6.6 per cent, to close at $3.40.

It’s the highest it has been since 2008, according to the Australian Financial Review.

Image courtesy of Mirvac

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