Summerset flags flat profit guidance on soft property market
Make us a preferred source
Make us a preferred source on Google
The news: New Zealand aged care provider Summerset Group has warned that a softer-than-expected property market at the start of 2024 has slowed moves to its retirement villages.
The numbers: Wellington-based Summerset said that the company's underlying profit for the half year to 30 June is expected to be similar to the same period last year.
The retirement village operator has set half-year underlying profit guidance of between NZD87 million ($79.15 million) to NZD90 million, compared to NZD87.2 million reported for last year's second half.
However, the ASX- and NZX-listed group recorded its highest ever first-half sales, with Q2 settlements up 31% quarter on quarter and 22% year on year.
The company also has construction in progress at 17 sites across New Zealand and Australia, and remains on track to delivery around 675 to 725 homes in 2024. However, it said it will deliver "closer to the lower end" of that range as it "actively and prudently" manages deliveries to market conditions.
The context: Summerset said that while sales are "progressing well", the property market remains "very challenging", with construction costs, interest rates and labour costs on the rise.
The company said that the wider property market in New Zealand has been "softer than anticipated" in 2024, restrained by high interest rates, weak consumer confidence and cost of living pressures.
What they said: Summerset CEO Scott Scoullar said: "Our residents' motivation to buy continues to be driven by life events, such as their health or desire for more community, these factors don't change in a constrained economy".
"While our prospective residents are still highly motivated the sluggish property market is restricting them from selling their home as quickly as they would like which is slowing some moves to our villages," he said.
The source: ASX announcement
