REA Group has posted a big drop in full-year profit but local earnings grew 9.5 per cent despite a residential listings slump and what the realestate.com.au owner called "unprecedented market conditions".
With local property prices continuing to decline, Australian residential listings fell eight per cent nationwide – dragged down by Sydney’s 18 per cent decline and Melbourne’s 11 per cent – but commercial and developer subscription revenue helped lift segment earnings.
Total profit for the 12 months to June 30 fell 58 per cent to $105.3 million, largely because of a previously announced $173.2 million impairment against its Asian operations.
Stripping out one-off items, profit at the 61.6 per cent News Corp-owned firm rose 5.5 per cent to $295.5 million on an 8.3 per cent rise in revenue.
“REA has delivered a strong result in a year of unprecedented market conditions,” chief executive Owen Wilson said on Friday.
“Our continued revenue growth was achieved despite significant declines in listings and new developments, a clear illustration of the value we deliver to customers and consumers.”
Mr Wilson said it would take some time for Australian residential listing volumes to recover, with July showing a 19 per cent decline on the same month a year earlier.
Sydney and Melbourne volumes were both about a third lower than a year earlier, but Mr Wilson said Reserve Bank rate cuts and a relaxation of lending affordability criteria would eventually lead to a pick up.
“A number of factors are now in place to support a market recovery, including lower interest rates and an improved lending environment,” Mr Wilson said.
“Coupled with a very healthy increase in buyer activity, it signals an eventual recovery of listing volumes.”
The non-cash impairment against the Asian unit that includes operations in Malaysia, Hong Kong, Indonesia, Thailand and Singapore was announced with the first-half results in February.
REA’S 2019 REVIEW
* Revenue up 8.3pct to $874.9m
* Profit down 58pct to $105.3m
* Underlying profit up 5.5pct to $295.5m
* Dividend up one cent to 63 cents, fully franked