Goodman Group increases growth forecast to 9.5%

Goodman Group delivered an operating profit of $465 million for the half year ended 31 December 2018, up 10.4% on 1H FY18.

Its statutory profit was $929.2 million.

The group has upgraded its forecast FY19 EPS to 51.1 cents per share, up 9.5% on FY18, maintaining its forecast full year distribution of 30.0 cents per security, up 7% on FY18.

Group Chief Executive officer, Greg Goodman said the results reflect continued strong performance across the management and development businesses.

"Our deliberate focus on infill markets, where property fundamentals are robust, has driven partnership returns and significant growth in assets under management which are up 24% to $43 billion," Goodman said. 

Goodman noted structural changes driving customers’ businesses have fuelled the continued evolution of the industrial property sector.

"Supply chain efficiency is critical for our customers’ success, with increased importance placed on the location and role of logistics and warehousing space," he said. 

"This trend has resulted in significant valuation gains of $2.4 billion over the half for the group and partnerships, like-for-like growth in net property income of 3.2% and a robust development workbook of $3.6 billion, expected to exceed $4 billion in the near term."

Source: Goodman Group

Valuation increases and development completions saw a valuation uplift of $2.4 billion across the group and partnerships.

The results continued strength in property fundamentals resulting in occupancy at 98%, weighted average lease expiry (WALE) of 4.7 years and like-for-like net property income growth of 3.2%.

Its development work in progress (WIP) was steady at $3.6 billion across 68 projects in 12 countries with a forecast yield on cost of 7.1%.

The management earnings were up 15% on 1H FY18 with average Partnership returns expected to be in the mid-teens for FY19.

Souce: Goodman Group

The concentration of its portfolio in key urban centres saw increased customer demand over the half, driving occupancy, rental growth and valuations. Coupled with continued supply constraints in Goodman’s markets, competition for sites and resulting increased intensity of use, property fundamentals are expected to remain robust.

Commenting on the outlook for the Group, Greg Goodman said their customers’ industries continued to experience considerable change which is driving opportunity.

"Most industries including e-commerce, traditional retail and third-party logistics, are re-evaluating supply chains, which is driving the evolution of the industrial property sector," he said. 

"Our strategic focus on infill markets is being met with strong customer demand which is generating long-term value. Barriers to entry remain high in our markets, but we have the management and infrastructure built over decades to facilitate the demand from our customers.

"Market conditions remain robust with the shift towards increased automation, consumerism and heightened service expectations. Consequently, we are experiencing high levels of profitability supported by these ongoing structural changes.

"We believe the opportunity to deploy capital at an attractive return is growing.

"As a result, FY19 EPS guidance is being increased to 51.1 cents per share, (up 9.5% on FY18) and FY19 DPS will be up 7% to 30 cents per security.”