Urban land development company Cedar Woods Properties Limited (ASX: CWP) this morning announced a 17% drop in full year revenue to $179 million, dragged down by the slowing resources-based Western Australia economy.
However the sale of company's Masters Home Improvement store in Williams Landing (Victoria) added a gain of $20 million which pushed net profit for the year up by 6% over 2014.
What the result means
The result means Cedar Woods Properties' earnings per share dropped by just 0.1% year-on-year and has enabled the company to pay out a full year dividend of 28 cents per share, fully franked. At the current share price this puts the company on a dividend yield of 5.7%.
Cedar Woods' dividend policy is to pay out around 50% of annual net profit, so there will still be cash left in the bank to reinvest towards the company's existing portfolio of development projects and to continue to hunt for further growth opportunities.
Where to now?
Despite the deflating economy, Cedar Woods Properties appears confident it can maintain its performance into the 2016 financial year, noting that:
"Assuming current market conditions continue, the company anticipates delivering a net profit after tax similar to last year's record profit".
By 'current market conditions' the company means low interest rates and steady migration flows which are expected to support demand for housing.
Despite the company's optimism, it is important to remember that there is often a lag between the slowdown in the economy and time taken to develop properties. This is clearly something which concerns investors, with shares in Cedar Woods Properties losing almost one third of their value in the last 12 months.