Mirvac share price lifts on 'strong result ahead of guidance' for FY22

Mirvac shares closed today's session nearly 4% higher after the property developer released its results for FY22.

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Key points

  • Mirvac shares closed up 3.83% today after the company released 'strong' results for FY22
  • The property developer reported an 8% lift in both profit after tax and operating earnings per share
  • Mirvac is targeting operating earnings of at least 15.5 cents per share and distributions of at least 10.5 cents per share in FY23

The Mirvac Group (ASX: MGR) share price was on the move today after the property developer released its full-year results for FY22.

Mirvac shares opened the day at $2.17 and reached a high of $2.205 in early trading.

At the market close, the Mirvac share price finished at $2.17, up 3.83% for the day.

Investors raise Mirvac share price despite modest profit gain

The highlights of Mirvac's results are as follows:

  • Statutory profit of $906 million, up 0.55% on the prior corresponding period (pcp)
  • Operating profit after tax of $596 million, up 8% on pcp
  • Operating earnings before interest and tax (EBIT) of $773 million, up 10% on pcp
  • Full-year distributions of $404 million to shareholders, up 3% on pcp
  • Operating earnings per share (EPS) of 15.1 cents per share, up 8%.

In its statement, Mirvac said it was "delivering a strong result ahead of guidance, with a statutory profit of $906 million and operating profit of $596 million, representing 15.1 cents per stapled security (cpss)".

The increase in profits and distributions on FY21 is modest. However, FY22 was "a more challenging operating environment", says Mirvac CEO and managing director Susan Lloyd-Hurwitz.

What else happened in FY22?

Mirvac reported that it exchanged approximately 2,900 residential apartments and settled 2,523 in FY22. This is in line with the company's settlement target of more than 2,500 lots.

The company also reported on its sustainability initiatives. It said it "achieved net positive carbon for scope 1 and 2 emissions nine years ahead of our target".

Over the 12-month period to 30 June, the Mirvac share price lost approximately 30% of its value.

What did management say?

Lloyd-Hurwitz said:

There is no doubt that FY22 presented a more challenging operating environment. We experienced the ongoing impacts of COVID-19, supply chain issues, labour shortages, rising inflation and interest rates, geopolitical tension, and extreme wet weather, particularly across the east coast of Australia.

Despite this, we have delivered a strong financial and operational result ahead of guidance, demonstrating the continued resilience of our people and the value of our integrated and diversified business model.

At the same time, we maintained a strong balance sheet and capital position, with sufficient liquidity and appropriate hedging. Combined with our planned $1.3bn of non-core asset sales, this helps ensure that we are well placed to capitalise on opportunities as they emerge, so that we can continue to deliver value to our securityholders into the future.

What's next?

In its FY22 report, Mirvac said it was now managing $10.2 billion worth of assets, up 3% on the pcp.

But that number is about to skyrocket as a result of Mirvac scoring the management rights to the $7.7 billion AMP Wholesale Office Fund (AWOF) in July.

AMP shareholders voted to give Mirvac control of the fund. As my colleague Brooke reported at the time, the deal will lift Mirvac's capital under management by about 76%. Mirvac shareholders loved the news and pushed the share price 1% higher on the day.

Lloyd-Hurwitz said the deal was "accelerating our Funds Management strategy, broadening our investor base, and introducing new accretive income streams".

Mirvac will take control of the fund in mid-October.

Regarding the softer residential property market, Lloyd-Hurwitz said selling conditions had "normalised" but "the underlying fundamentals of the residential market in which we operate remain solid".

She said:

Our apartment projects are expected to complete into an undersupplied market, positioning us well to capture demand. Our brand, focus on owner occupiers, diversity of product, and reputation for quality, will help us to remain resilient in a rising interest rate environment.

Mirvac said if there was no material change in the operating environment, the company was targeting operating earnings of at least 15.5 cents per share and distributions of at least 10.5 cents per share in FY23. It maintains the same goal of settling more than 2,500 residential lots in FY23.

Mirvac share price snapshot

The Mirvac share price is down 28% in the year to date. But like many other ASX 200 shares, it has rebounded in the past month and is up 4.83%.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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