Mirvac post 44% 1H profit hike on the back of residential momentum

Despite initially trading higher at the open, diversified property developer Mirvac Group’s (ASX: MGR) was trading -3.45% lower after lunch after announcing solid first half earnings growth this morning.

For the six months ended 31 December, Mirvac delivered a 44% jump in statutory profit to $565m and an 8% lift in earnings to $391m.

Management reiterated its guidance for FY 2022 and made a half year distribution up 6% to 5.1 cents per share.

As Macquarie had predicted, in light of conservative guidance, Mirvac did not follow through with earnings upgrades.

By reaffirming full-year guidance, Jarden infers that Mirvac is expecting the resumption of normalised business activities 2H FY22.

Interim highlights included:

• Operating profit after tax up 9% to $297m.

• Earnings per share (EPS) up 9% to 7.5 cents.

• Operating cash flow down -6.8% to $413m.

• 248% increase in commercial & mixed-use development earnings to $73m.

• 17% lift in Residential earnings to $89m.

• Integrated Investment Portfolio (IIP) business posted a -5% decline in earnings to $270m, due largely to the impact of lockdowns.

High-quality assets

Mirvac’s CEO & Managing Director, Susan Lloyd-Hurwitz partly attributes a strong first half result to the group’s sustained focus on carefully managing the global pandemic, and partly to the strength of the group’s diversified and integrated business model.

Lloyd-Hurwitz noted that a strong performance in the group’s development businesses was impacted by extended lockdowns in the first half of FY22.

“In Residential, for example, we continued to see strong sales momentum despite the roll-off of government stimulus, with 95% of forecast EBIT for FY22 already secured,” said Lloyd-Hurwitz.

“Successful pre-leasing and execution in Commercial & Mixed Use also supported earnings and asset revaluations, as we continue to focus on creating and curating high-quality assets that will deliver future income to the Group.”

Looking forward

Lloyd-Hurwitz pointed to the group’s strong balance sheet, the secure income stream from a high-quality investment portfolio, the robust commercial development pipeline, and a high level of residential pre-sales ensures as underpinning the group’s resilience within what remains a tough trading environment.

“As a result, we have retained guidance of at least 15.0 cents per stapled security in FY22, noting that we will continue to closely monitor our operating environment.”