Australia's Mirvac loses most in 4 years after wider annual loss, bleak forecast

Mirvac

08/08/2024 03:03

By Ayushman Ojha
       Aug 8 (Reuters) - Shares of Mirvac Group  MGR.AX  posted
on Thursday their biggest intraday drop in more than four years,
after the Australian property dealer reported a wider annual
loss and also flagged lower earnings estimate for the upcoming
year.
    Mirvac's stock was down nearly 13% in early trade, and
marked its worst intraday percentage loss since March 19, 2020. 
  
    The company's loss attributable for fiscal 2024 came in at
A$805 million ($525.02 million), compared with a loss of A$165
million last year.
    Analysts at Jarden said even though the results were broadly
in line with their estimates, the company's underlying
performance came in weaker than expected. 
    "Earnings are expected to be lower next year, reflecting the
impact of a lower contribution from our development business and
higher net interest costs related to development activities,"
Mirvac said in a statement.
    The company's gross margin at its residential division was
below its target range of 18% to 22% due to higher costs across
apartment projects in New South Wales. It expects this trend to
continue throughout fiscal 2025, with Queensland projects to be
affected as well.
    "While market conditions are likely to remain challenging in
FY25, we are setting ourselves up for recovery," Mirvac CEO
Campbell Hanan said.
    The company forecast an operating profit of between A$0.12
and A$0.123 per share, 13% below Jarden's estimate and nearly
11% lower than Citi's view.
    "Residential sales and settlements remain under pressure and
margins will likely be impacted by skew towards apartments and
settlement delays," according to Jarden analysts.
    Mirvac shares, which have fallen nearly 12% this year, are
expected to trade sideways until further clarity on the earnings
growth outlook is provided, according to Citi.

    
     ($1 = 1.5333 Australian dollars)

 (Reporting by Ayushman Ojha; Editing by Sherry Jacob-Phillips)
 ((Ayushman.Ojha@thomsonreuters.com;))