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Saturday 19

August, 201712:26 AM



REA flags further housing market slowdown

REA flags further housing market slowdown

Shares in REA have fallen after the company reported full-year net profit fell 19 per cent to $206.3 million and warned of a slowdown in the housing market.

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By AAP 11.08.2017 03:35 PM

Revenue in REA Group's Australian arm has soared despite a slowdown in the housing market but the online real-estate advertiser has warned it expects conditions to further decline in 2018.

Shares in REA fell about six per cent on Friday after the company reported a 19 per cent slip in full-year net profit to $206.3 million, following a $182.8 million writedown of its Asian business.

Revenue for the year to June 30 rose 16 per cent to $671.2 million, driven by a 14 per cent climb in revenue for its Australian division - which includes realestate.com.au, realcommercial.com.au and Flatmates.com.au.

Chief executive Tracey Fellows said REA was a clear market leader in Australia.

"We continue to diversify our business and deepen consumer engagement across the property journey," Ms Fellows said on Friday.

The News Corp-controlled company said the 2016/17 result was achieved despite a fall in residential listings during the year and "a significant decline in new dwelling commencements".

Listings had increased slightly in July, 2017 compared to a year earlier when July performance was affected by the federal election.

But chief financial officer Owen Wilson said new dwelling commencements had declined throughout the second-half of 2016/17 and would remain low during 2018.

"Given the government regulation around foreign ownership, the removal of stamp duty sanctions on new properties and the tighter lending requirements from the banks we expect this year-on-year decline to continue throughout 2018," Mr Wilson said on Friday.

REA also noted operating costs from its new financing business, in which it took a majority stake in mortgage broker Smartline and set up a broking partnership with National Australia Bank, would exceed the rate of revenue growth in 2018.

It does however expect the financing business to bring in between $26 million and $30 million in revenue in 2018.

Digital real estate was the strongest performer for REA Group's majority stakeholder, with News Corp on Friday saying the division - which includes businesses in the United States and Australia, accounted for almost 40 per cent of its full-year profit.

REA Group shares were down $3.90, or 5.7 per cent, to $64.52 at 1535 AEST in a broadly lower market.

ASIA WRITEDOWN HITS REA GROUP:

* Full-year reported net profit down 19pct to $206m

* Revenue from core operations up 16pct to $671.2m

* Final fully franked dividend of 51 cents, up 5.5 cents

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