The Unibail-Rodamco-Westfield (ASX: URW) share price is dropping today after the release of the company’s 2020 full-year results this morning before market open. Unibail shares are down 2.58% to $4.72 at the time of writing after closing at $4.84 yesterday afternoon. The company is now down almost 15% since 1 February.
Let’s have a closer look at the company and today’s results.
What does Unibail-Rodamco-Westfield do?
Unibail-Rodamco-Westfield is a real estate investment trust (REIT) formed after the demerger of the old Westfield Corporation. When this demerger occurred, Westfield split its assets between Scentre Group (ASX: SCG) and Unibail, with Scentre taking charge of the Australian and New Zealand Westfield shopping centres, and Unibail taking Westfield’s international centres.
The company has fallen on hard times recently, hit by the double-whammy of COVID-19 and the associated lockdowns, as well as the rise of online retail. The company’s share price has fallen from around $14.70 5 years ago to today’s price of $4.66 a share.
Unibail bombs out of US
Unibail was hard-hit by the pandemic, which is reflected in the company’s numbers today. The company reported a 26% drop in net rental income from its centres to 1.79 billion euros for 2020. That’s down 28.1% from 2019’s 2.49 billion euros. Recurring net profit also slumped, down 40% to 1.06 billion euros from 2019’s 1.76 billion euros. In earnings per share (EPS) terms, recurring EPS fell from 12.72 euros in 2019 to 7.63 euros for 2020.
Unibail’s total portfolio valuation also took a hit, dropping from 65.34 billion euros in 2019 to 56.32 billion euros in 2020.
It’s worth noting that Unibail’s centres were shut for 93 days in 2020. There were only 70 days in the entire year when the centres were not subject to restrictions. Even today, the company reports that roughly half of its centres remain closed. Further, Unibail was forced to suspend rent collection for much of the year. Only 80% of that forfeited income has been repaid.
But perhaps the big news from Unibail’s earnings is its downsizing program. Unibail has announced that it is largely leaving the entire United States market by the end of 2022. It plans to offload its US and other European assets for an estimated 4 billion euros. That will go towards paying off the company’s ~24 billion euros of debt. In this light, Unibail has also announced it will not be paying dividends until at least 2023.
Although these results may not be exactly what Unibail shareholders probably wanted to hear, the company was more optimistic about the future:
Looking forward, the group sees good prospects for a solid recovery starting at some point in the second half of the year, as vaccination efforts achieve critical mass and restrictions get lifted. Government support means that consumer finances in the group’s markets remain robust and the group firmly believes that people will again seek out the mix of top brands and great experiences offered by URW’s Flagship destinations when they are able to.