Goodman Signals Higher Operating EPS in Fiscal Year 2024, Unchanged Dividend

By David Winning

SYDNEY--Goodman signaled its operating earnings would rise again in fiscal 2024, as warehouses and industrial property continue to outperform other property assets despite recession risks in some markets, including the U.S.

On Thursday, Goodman said it expected operating earnings per security would rise by 9% in the 12 months through June, 2024. The company also said it expects to hold its distribution flat at 30 Australian cents per security.

In recent years, Goodman's maiden earnings guidance has proven to be conservative with management upgrading it several times as months go by. The company's properties are mostly fully let, offering a point of difference to owners of offices and malls which have been exposed to shifts in tenant behavior resulting from the pandemic and the impact of rising interest rates.

Having near-zero vacancy rates creates tension among prospective tenants that allows Goodman to negotiate higher rents for its property. Goodman has long pursued a strategy of focusing on so-called gateway cities such as Sydney, Hong Kong and Los Angeles that share characteristics such as a scarcity of land, close proximity to wealthy consumers, and serviced by modern infrastructure and transport networks.

Chief Executive Greg Goodman said guidance for a flat dividend reflected the group's activity levels and the current desire to remain in the lower half of our financial risk management policy range for gearing.

Goodman's outlook was provided alongside a 54% fall in net profit to A$1.56 billion in the 12 months through June. Annual operating earnings per security of 94.3 cents was up 16% and beat guidance provided in May for 15% growth, itself markedly higher than an original projection of 11% growth at the start of its fiscal year.

Goodman said its property was 99% occupied at the end of June, with like-for-like net property income growth of 4.7% over the past year. Total assets under management rose 11% to A$81.0 billion.

Its gearing--a measure of debt relative to equity--was 8.3% at the end of June, down from 8.5% a year ago. Having a low gearing means Goodman is relatively well placed compared to many real-estate investment trusts to withstand the impact rising interest rates.

The company said its development work in progress totals A$13.0 billion across 81 projects at the end of June.

"With our significant development workbook underway, underlying structural demand from customers and robust capital position across the Group and Partnerships, we believe Goodman can continue to deliver growth despite the risks associated with current market volatility," Goodman said.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 16, 2023 18:49 ET (22:49 GMT)

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