Retirement home operator Aveo Group (ASX: AOG) today warned investors that weak property markets will dent its FY 2019 profits as potential occupants struggle to sell their own homes before taking the keys to an Aveo retirement property.
At the very end of FY 2019 Aveo was also accused by a Fairfax Media investigation of “ripping off” its retirement home residents among other damaging allegations that may have flowed through into weaker results over FY 2019.
Understandably, the company denied them and did not reference them in today’s brief update on its problems in FY 2019.
Despite the tough conditions, Aveo claimed that resident interest in its retirement properties “remained strong” through FY 2019 with 1,111 total “written” sales for the first 51 weeks of the financial year, with the final quarter of FY 2019 being the strongest of the lot.
However, what it describes as the adverse “conditions” mean settled sales for the financial year will come in around 900 and adjusted earnings per share will be 8.6 cents on an adjusted profit around $50 million.
The group also flagged that write downs to the value of its assets (e.g. property portfolio) mean the statutory profit is likely to come in far lower.
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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.