REA Hoists Dividend as 1st Half Profit Rises 22% on Volume Growth — Update
By Stuart Condie
SYDNEY--REA Group raised its dividend by 16% as growth in Australian residential property listings helped the real-estate classifieds provider lift first-half core profit by 22%.
The ASX-listed company on Thursday reported a net profit from core operations of 249.7 million Australian dollars (US$162.9 million) for the six months through December, compared with A$204.9 million a year earlier.
Net profit fell 37% on a statutory basis to A$127.4 million on the impact of a A$120 million impairment against REA's 17% stake in Asia-focused PropertyGuru. Revenue rose by 18% to A$725.5 million.
REA raised its interim dividend to A$0.87, compared with A$0.75 a year earlier.
The average analyst forecast was for a core net profit of A$254 million off revenue of A$721 million, according to data compiled by FactSet.
New residential sale listing volumes at REA's core Australian operation rose by 4% on year, propelled by activity in the country's two largest cities. Listings volumes in Sydney and Melbourne grew by 19% and 18%, respectively, as rallying property prices enticed sellers back to the market.
Buy yield rose 19% on year, benefiting from factors including higher property prices and increased use of its premier product. REA expects yield to be lower in the second half of the fiscal year as growth in Sydney and Melbourne listings slows.
Data by property analytics firm CoreLogic showed the average Australian residential property value rose by 8.1% over the 12 months through December, comfortably reversing 2022's 5.3% fall. Surging property values have made the market attractive for sellers looking to cash in, while making conditions tougher for buyers.
Higher interest rates have pushed up borrowing costs for prospective buyers, making it harder for many to meet lenders' affordability criteria.
The Reserve Bank of Australia raised the country's cash rate more in 2023 as it tried to bring inflation under control. This week it held the rate at 4.35%--up from 0.1% in May 2022--and signaled the potential for cuts later this year, which could help increase property turnover.
First-half group operating costs rose by 11% on year and are likely to grow by a percentage in the mid-to-high teens over the whole of the 2024 fiscal year, REA said.
REA is 61% owned by News Corp, which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
February 07, 2024 17:06 ET (22:06 GMT)
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