Goodman Group (GMG)

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14 February 2020

Results 

Half Year 2020

Half Year 2019

Change

Revenue and other Income ($m)

1,391.6

1,796.0

-22.5%

Development Earnings ($m)

300.1

273.3

+9.8%

Management Earnings ($m)

219.0

189.4

+15.6%

Property Investment Earnings ($m)

213.3

181.8

+17.3%

Operating Profit ($m)

530.4

465.0

+14.1%

Statutory Profit ($m)

810.6

929.2

-12.8%

Interim Distribution ($)

0.15

0.15

-

Goodman Group (GMG) shares lift on stronger result and raised outlook  

What happened?

  • Industrial property group Goodman (GMG) posted a 14.1% lift in Operating Profit to $530.4m for the six months to 31 December 2019. The result was ahead of market expectations. GMG is now the largest listed property group on the ASX.
  • GMG will pay eligible investors a $0.15 per share distribution on February 25. It went ex-dividend on 30 December.

Why did it happen?

  • GMG’s result was driven by the increased popularity of online shopping and rise of tech giants like Amazon (its biggest customer). This has created the need for large warehouses and distribution centres to be built globally. In an interview with the Financial Review, GMG CEO Greg Goodman said between 60 and 70 per cent of its projects were e-commerce or technology driven.
  • Earnings from its Development, Management and Investment businesses all improved over the half. Its Development unit stood out, contributing most to its bottom line thanks to demand outstripping supply with limited vacancies in its markets. It commenced $1.7bn worth of work in the half.
  • GMG is well diversified globally, with approximately 36% of its earnings generated in ANZ, a third in the UK/Europe, a quarter across Asia and close to 10% in the Americas. This prevents the company from being overexposed to one geographic market.
  • In relation to the coronavirus, GMG said “…there is no evidence to suggest any material impact on our business…in the short term.” 

Where to now?

  • GMG upgraded its earnings goals for the sixth straight year thanks partly to the increased popularity of online shopping. It now expects earnings to lift by 11% over FY20 and confirmed its forecast to distribute an additional 15 cents to shareholders in the second half. 
  • GMG shares rose strongly to 12-year highs thanks to its upbeat outlook on the future. GMG share have improved the majority of the time post earnings over the past decade and is in its ninth straight year of gains.

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