Friday, 19 February 2021
Goodman Group (Goodman or Group) today announced its results for the half year ended 31 December 2020. The Group delivered an operating profit1 of $614.9 million, up 16% on the prior corresponding period and operating earnings per share (EPS) of 33.1 cents2, up 15% on the same period last year. Statutory profit was $1,041.5 million.
Key highlights for the year are:
Group Chief Executive Officer, Greg Goodman said: “The logistics and warehousing sector are playing a significant role globally in providing essential infrastructure to the digital economy. On average, global online sales increased by 30% in 2020 and are expected to show strong growth over the next five years. We are experiencing strong demand from customers as they meet increasing consumer requirements and higher utilisation of properties.
Our development activity is reflecting these trends and the flow-on effects in the digital space. As a result, we have again increased the levels of development work in progress to $8.4 billion. Maintaining a strong balance sheet and retaining income has provided us with significant liquidity, stability and financial resources for sustainable growth.”
Property investment – underlying fundamentals and demand driving strength in asset pricing
Strong customer demand driven by the digital economy continues to support the activity and property fundamentals for our business. There has been a continued shift towards higher penetration of retail sales online and growth in digital and technology-related demand which have increased requirements of supply chains.
Earnings from investments reflects the acquisitions and development completions offset by asset sales. These sales will provide funding for development activities, driving higher total returns and higher allocation to the remaining preferred and stronger markets.
The competition for assets and undersupply of quality properties in the selected markets where Goodman operates, as well as strong investment conditions, has seen the weighted average cap rate (WACR) across the portfolio compress by 17bps to 4.7% since June 2020.
Key highlights include:
The Group’s development activity reflects ongoing structural changes in consumer behaviour. We expect these levels of customer-led activity to be prolonged in our markets, driving higher revenues and potentially working capital requirements in the next few years.
Strong customer demand and desirability of sites has translated into continued high pre-commitment on WIP at 69% with projects completed averaging 95% committed. Diversification of risk has been maintained with 80% of developments undertaken within the Partnerships.
Scarcity of land and growing environmental considerations are driving increased intensity of use from existing sites. This is providing value add opportunities through brownfield developments, multi-storey logistics, data centres and other commercial uses, while contributing to our net zero / carbon neutral targets.
Environmental, social, governance (ESG) – carbon neutral operations by June 2021
Our approach to environmental sustainability is about long-term thinking and leadership. Our own operations are on track to be carbon neutral well before our 2025 target.
In the first half of FY21, the Group has:
Group Chief Executive Officer, Greg Goodman said: “We view our approach to sustainability as one that leads to positive economic, environmental and social outcomes for our business, stakeholders and the planet. We are focussed on energy efficiency, climate resilience and the wellbeing of our customers and people. Customer demand for strategically located space, close to consumers that makes a positive contribution towards a more sustainable world has never been more important.”
Outlook – sustainable returns, sustainable business
Commenting on the outlook, Greg Goodman said: “The Group has significant human capital and expertise, financial resources and a strategic real estate portfolio to generate opportunities in changing operating conditions.
Our business is performing strongly. The continuing shift in use and requirements from our customers, driven by the long-term trends in the digital economy is supporting continued demand for our properties. Consequently, we have upgraded our FY21 forecast operating profit to $1.2 billion (representing EPS growth of 12% on FY20). Forecast distribution for FY21 will remain at 30.0 cents per security, in keeping with our financial risk management policy.”
Goodman sets its targets annually and reviews them regularly. Forecasts are subject to there being no material adverse change in market conditions, or the occurrence of other unforeseen events.