REA Group profit dives 98 per cent after $173m impairment
Written on the 8 February 2019 by David Simmons
Were it not for a $173.2 million impairment charge REA Group was shooting for success during the first half of FY19.
The company's NPAT closed at $176.6 million in HY2019, up 20 per cent on the same time last year but dived 98 per cent to $2.5 million once all factors were taken into account.
The impairment charge is a disappointing conclusion to what was otherwise a strong half for the real estate media company.
Revenue was up 15 per cent to $468.2 million, and earnings were up 19 per cent to $289.1 million.
The impairment charge came about because of changes in the macro economic environment in the group's Asian businesses according to REA.
The carrying value of goodwill for the Asian segment of REA Group therefore took a hit to the tune of $173.2 million.
REA Group CEO Owen Wilson says the company is not dissuaded by today's results in the region.
"The long-term growth potential of Asia is very clear, and we will continue to invest to maintain and strengthen our leadership position while these markets mature," says Wilson.
"Our focus is on having the best talent in the region, improving our audience lead, and continuing to create innovative products and experiences for our customers and consumers."
Back home Wilson says the company faced "tough conditions" but pulled through on the strength of realestate.com.au which continues to be the number one platform in the country by a large margin.
Improved results were reported across the board in Australia despite unfavourable market conditions with national listings decreasing 3 per cent including declines of 10 per cent in Sydney.
The board has declared an interim dividend of 55 cents per share fully franked; a 17 per cent increase on the prior year.
The start of 2019 has been flat for REA, with residential listings down 11 per cent. The company has said it anticipates this to be the trend during the beginning of 2019 because of the upcoming Federal Election.
Shares in REA Group are down 3.48 per cent to$75.23 per share at 10.15am AEDT.
Business News Australia
Author: David Simmons