Summerset posts strong lift in profit

Navigation for News Categories

Summerset retirement village at Avonhead, Christchurch.
Photo: Google Maps

Retirement village operator Summerset posted a strong lift in profit as it delivered new units, saw higher margins and strong sales.

Key numbers for the 12 months ended December compared with a year ago:

Net profit $436.3m vs $269.1m
Revenue $272.2m vs $238.7m
Underlying profit $190.3m vs $171.4m
Development margin 31.6% vs 29.7%
Final dividend 13.2 cents a share vs 11.6cps

Its bottom line profit was the second best in the company’s history, driven by strong revaluation gains of $441.6 million.

Underlying earnings rose 11 percent, but was partly offset by higher costs.

Summerset chief executive Scott Scoullar said 2023 was a “very good year” for the company.

“We are very pleased with this result. We have continued to deliver value for our residents and shareholders during a year which has been one of the most challenging we’ve seen as a company,” he said.

“Increasing inflation, recruitment shortages and a falling residential property market made business difficult throughout the year, and yet we withstood those challenges and continued to grow.”

Summerset said it also achieved a record year of construction and met its build target.

Total sales of occupation rights rose 10 percent from the year earlier.

Scoullar said the company was optimistic for the year ahead and was focused on growth.

“We expect to deliver 675-725 homes in 2024, including Stage 1 of our St Johns village in Auckland, our first multi-level village, delivering four of the seven buildings comprising the main building, care centre and sixty percent of the village’s homes.”

Forsyth Barr senior analyst, Aaron Ibbotson, said Summerset’s underlying earnings were strong and were largely in-line with its estimate.

“Debt increased by 35 percent or $350m, marginally more than we had anticipated, but gearing was lower, driven by strong re-valuation gains,” he said.

“Summerset also guided to strong deliveries of new units in FY24, up [circa] 10 percent on FY23, indicating confidence in forward demand for its products and continued support from its banks and the market,” Ibbotson said.