The Scentre Group (ASX: SCG) share price has dropped this morning after the company released its results for the year ending December 31, 2019 before market open.
Scentre shares closed at $3.78 yesterday but opened at $3.69 today after the results were released and has trended lower since – going for $3.68 at the time of writing.
Scentre shares are now barely above their 52-week low of $3.63 at this new level and conversely, a far cry from the 52-week high of $4.16 that the company made back in early July last year.
What did Scentre announce this morning?
Scentre announced that its Funds from Operations (FFO) was in line with forecasts, coming in at $1.345 billion. FFO is a common method of reporting earnings from property-based companies like Scentre.
Per security (or share), this number translates to 25.42 cents per security, which is up 0.7% from the previous year (3.2% when adjusted for security buy-backs and other transactions).
Of this 25.423 cents of FFO per security, Scentre paid out 22.6 cents as distributions, which was up 2% on the prior year (and again, in line with forecasts).
Pleasingly for the company (and its shareholders), Scentre reported that its property portfolio (made up of 42 Westfield shopping/'living' centres) has an occupancy rate of 99.3% and collectively, has seen over 548 million visitors over the twelve months to December – an increase of 12 million visitors on the prior year.
However, the company's net assets have shrunk during the year and now sit at $23.339 billion, down from 2018's $23.638 billion.
Outlook for 2020
Scentre expects FFO to come in at 25.3 cents per security in 2020 (essentially flat from 2019's numbers). However, the company notes that this number doesn't take into account the effects of Scentre's up-to-$800 million security buy-back program, which should be completed this year.
For 2020, Scentre expects to pay a 23.28 cents per share distribution, which would represent a 3% increase and implies an unfranked forward yield of 6.33% on the current share price.
Scentre CEO Peter Allen had this to say on today's results:
"Our 42 Westfield Living Centres are each strategically located in highly urbanised areas with strong population growth and density… We continue to innovate in how we engage with our customer and are using new technology to enhance our direct engagement with the consumer. For over 60 years, our business has constantly adapted to be at the forefront of consumer change. Our ability to directly engage with the customer and deliver what they want will continue to deliver long-term sustainable earnings growth."
