GOODMAN TAKES PROFIT AND REVENUE DECLINE BUT LOOKS TO CASH IN ON AMAZON'S ARRIVAL
Written on the 21 August 2017 by Janelle Alawabdeh
Commercial and industrial property group Goodman (ASX: GMG) has reported underlying full year net profit has dropped 39 percent to $778.1 million, however it has forecast a growth in earnings as investors bet that it will benefit from Amazon.com's planned entry into Australia.
The company's net profit for the 12 months till of the end of June in FY17, was down from $1.27 billion from the previous year while revenue also fell significantly 13.4 per cent to $2.55 billion. Full year operating profit rose 8.6 per cent to $776 million.
Goodman industrial space and logistical operations near major cities and suburbs are increasingly in demand in technologically advanced companies as more consumers continue to purchase products online.
Analysts believe that Goodman could be a major beneficiary of Amazon's Australian launch as the US behemoth will need several distribution centres to begin operations.
"Rapid advancing technology and increased consumer expectations around price, product availability and delivery, while disruptive for some businesses, are providing us with opportunities," says CEO Greg Goodman (pictured).
"Although the evolution of e-commerce and supply chain transformation are still in their early stages, we are seeing increased demand for or expertise in providing high quality logistics facilities in prime locations," he says.
"This is a trend we expect to accelerate over the next five to 10 years."
Goodman is forecasting to generate $828 million of operating profit in FY18 resulting in operating earnings per share growth of 6 per cent in FY17.
"Our FY17 operating profit of $776.0 million is the result of strong operational performance and the deliberate repositioning of our business over the last three years," Greg Goodman says.
"Since 2014, our assets under management have grown to $35 billion to despite $8 billion in asset sales and over the last five years we have consistently delivered operating profit and EPS growth of great than 7 per cent," he says.
"We've taken advantage of the property cycle to make $3.5 billion of asset sales across the platform this financial year, redeployed this capital into strategic developments and reduced group leverage to 5.9 per cent."
Goodman has lifted its final dividend by 1.1 cents in the past year to 13.2 cents per share bringing it to a full year dividend payout to 25.9 cents.
Business News Australia
Author: Janelle Alawabdeh Connect via: Twitter