The Mirvac Group (ASX: MGR) share price is on the move on Thursday morning following the release of its half year results.
At the time of writing, the property company's shares are up 1% to $2.64.
Mirvac share price rises following solid first half growth
- Statutory profit up 44% to $565 million
- Earnings before interest and tax (EBIT) up 8% to $391 million
- Operating profit after tax up 9% over the prior corresponding period to $297 million
- Earnings per share up 9% to 7.5 cents
- Operating cash flow down 6.8% to $413 million
- Half year distribution up 6% to 5.1 cents per share
- Full year guidance reaffirmed
What happened during the first half?
For the six months ended 31 December, Mirvac delivered a 44% increase in statutory profit to $565 million and an 8% lift in EBIT to $391 million.
The latter was driven by a 248% increase in Commercial & Mixed Use Development EBIT to $73 million and a 17% lift in Residential EBIT to $89 million, which was partially offset by weakness in the key Integrated Investment Portfolio (IIP) business. Due largely to the impact of lockdowns, IIP posted a 5% decline in EBIT to $270 million.
This ultimately led to an operating profit after tax of $297 million, which was up 9% over the prior corresponding period. This compares favourably to the market consensus estimate of $250 million.
Management commentary
Mirvac's CEO & Managing Director, Susan Lloyd-Hurwitz, was pleased with the company's performance given the difficult operating environment.
She said: "Today's result reflects our continued focus on carefully navigating the ongoing disruption caused by the global pandemic, while highlighting the strength of our diversified and integrated business model."
"As we expected, the extended lockdowns in the first half of the financial year impacted the performance of our Integrated Investment Portfolio, concentrated in Retail. However, this was offset by a strong performance in our development businesses."
"In Residential, for example, we continued to see strong sales momentum despite the roll-off of government stimulus, with 95 per cent of forecast EBIT for FY22 already secured. Successful pre-leasing and execution in Commercial & Mixed Use also supported earnings and asset revaluations, as we continue to focus on creating and curating high-quality assets that will deliver future income to the Group," Lloyd-Hurwitz concluded.
Outlook
Management acknowledges that the Omicron variant is presenting a number of challenges, such as supply chain constraints and labour shortages. It also notes that the extension of the Commercial Code of Conduct for retail tenants is likely to put pressure on cash collection rates in the short term.
However, management remains positive on the company's prospects and has reaffirmed its guidance for FY 2022.
Susan Lloyd-Hurwitz commented: "Our strong balance sheet, the secure income stream from our high-quality Investment portfolio, our robust commercial development pipeline, and a high level of residential pre-sales ensures our business remains resilient. As a result, we have retained guidance of at least 15.0 cents per stapled security in FY22, noting that we will continue to closely monitor our operating environment."
