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Domain swings to huge loss on property pain

Domain Holdings Australia (ASX: DHG) shares have swung into green 3.7% higher at $2.98 this morning after the operator of property website domain.com posted its results for the financial year ending June 30, 2019. Below is a summary, with comparisons to the prior corresponding period. The adjustments below largely reflecting the backing out of certain one-off non-cash costs linked to FY 2019’s property slowdown.

  • Adjusted revenue of $335.6 million down 6.1%.
  • Adjusted EBITDA of $98.0 million down 15.3%.
  • Adjusted EBIT of $65.9 million down 26.4%.
  • Statutory loss of $137.6m includes goodwill impairment of $178.8 million
  • Adjusted net profit of $37.4 million down 29.3%.
  • Adjusted earnings per share of 6.43¢ down 29.9%.
  • Final dividend 4cps, taking full year dividends to 6cps
  • Net debt $113.2m

It’s no secret that residential property listings in Sydney, Melbourne and elsewhere plummeted over FY 2019 which led to Domain’s residential property revenue lifting only 0.5% higher over the period. The group also noted that FY 2020 listings are weak so far, but buyers are returning to property markets thanks to RBA rate cuts. 

Residential property is Domain’s main operating segment that includes ‘for sale’ and ‘rental’ listings that draw revenue by selling premium or ‘depth’ advertising listing products.

The group is also branching out into digital display advertising and enterprise-facing property data services for real estate agents or associated professionals. 

Domain is also now part owned by the merged Nine Entertainment / Fairfax Group (ASX: NEC) and has the opportunity to leverage its popular broadcast and digital assets to funnel traffic to its domain.com website and other services. 

Its principal rival REA Group Limited (ASX: REA) is still majority owned by News Corp (ASX: NWS) that also uses its digital platforms to funnel traffic. News Corp also has a partnership with jobs classifieds business SEEK Limited (ASX: SEK).

Domain shares are down 16 per cent over the year which is roughly in line with the fall in its operating income.

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Motley Fool contributor Tom Richardson owns shares of REA Group Limited and SEEK Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended REA Group Limited and SEEK Limited. 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.