Domain Group's first half has been weighed down by housing market weakness, though it says signs of property upswing point to happier times ahead.
The real estate advertiser and services business on Thursday announced it had swung to a $22.8 million interim profit from an impairment-driven $154.1 million loss a year ago, even as its revenue slipped 8.0 per cent to $147 million.
Underlying earnings in the six months to December 31 dropped 8.9 per cent to $47 million as the company bemoaned “unprecedented declines” in new market listings.
Shares in Domain slumped to their lowest point for the year so far following the release of its first-half results, falling as low as $3.50 and still 6.46 per cent lower at $3.545 by 1510 AEDT.
“For the first half … Domain delivered a solid performance in the context of the challenging period which the Australian property market has been experiencing,” chief executive Jason Pellegrino said.
Mr Pellegrino maintained a 5.0 per cent like-for-like decline in residential revenue was a solid result considering the challenging market environment, with total market residential listings down about 12 per cent for the half.
The company, 60 per cent of which is owned by Nine Entertainment, was boosted by a $8.3 million gain after tax to fair value on Review Property and Commercialview, and a gain on debt refinance.
Media, developers and commercial revenue declined 6.0 per cent as a continued strong performance from commercial was offset by the difficult conditions for media and developers.
“Additionally the broader digital advertising market was soft, particularly in the first quarter,” Mr Pellegrino said.
“”The developer market reflected the absence of new high-rise developments in NSW and Victoria as developers continue to defer new projects.”
He said market activity for smaller boutique projects had improved but these required lower levels of marketing support.
Queensland had shown early signs of market recovery that underpinned an encouraging performance.
Print revenue adjusted for the sale of Star Weekly declined 35.2 per cent and print earnings declined 43.2 per cent.
Domain will pay an interim dividend in half to 2.0 cents per share, fully franked, in line with a year ago.
The firm said trading in January 2020 reflected a soft start to the year in a seasonally small month for listings, thought there have been early signs of improving property market activity since the Australia Day weekend.
Domain said second-half operating costs are expected to be flat to slightly up on last year’s base of $92.5 million.
DOMAIN’S TOUGH FIRST HALF
* Revenue down 8.0pct to $147m
* Net profit $22.8m vs impairment-driven $154.1m loss pcp
* Underlying earnings down 8.9pct to $47m
* Interim dividend held at 2.0 cents per share, fully franked.