SYDNEY – Domain Holdings Australia, the country’s second-largest real estate advertiser, has announced a 19% decline in its annual profit due to lower listing volumes. Despite the challenging market conditions, the ASX-listed company maintained its dividend.
For the 12 months ending in June, Domain reported a net profit of AUD 26.1 million, compared to AUD 32.3 million in fiscal year 2022. Revenue slightly decreased by 0.6% to AUD 345.8 million, primarily driven by a 14% decline in national listings. However, price increases partially offset the drop.
Underlying earnings before interest, tax, depreciation, and amortization (EBITDA) stood at AUD 103.3 million, down from AUD 122.1 million in fiscal year 2022.
On a continuing operations basis, excluding the home-loans joint venture it plans to exit, Domain achieved an underlying net profit of AUD 38.6 million. Analysts had estimated an underlying net profit of AUD 39.0 million based on revenue of AUD 363.8 million.
Controllable yield increased by 8%, surpassing company guidance, while operating costs reached AUD 251.2 million on a continuing-operations basis.
Despite the decrease in profit, Domain’s directors have decided to maintain the final dividend at 4.0 Australian cents per share.
Residential Sale Listings in Sydney and Melbourne Decline as Borrowing Costs Rise
Residential sale listings in Sydney and Melbourne, Australia’s largest two cities, experienced a significant 20% year-on-year decrease, primarily due to higher borrowing costs that have deterred many potential buyers. The Reserve Bank of Australia has implemented 12 interest rate hikes since May 2022, with 10 of those increases occurring during Domain’s fiscal year 2023.
According to property analytics firm CoreLogic, data reveals that the average value of residential properties in Australia declined by 7.9% over the 12-month period ending in February. However, despite this downturn, the tight supply in the market subsequently led to a rise in the average house prices in Australia for five consecutive months up until July. Analysts widely believe that this trend will contribute to the recovery of Domain’s revenue and profit in fiscal year 2024.
Domain has reported that early signs of a listings recovery have emerged in Sydney and Melbourne within the first six weeks of fiscal year 2024. However, lower-yielding markets in Queensland and the Western Australian states continue to be weak.
For fiscal year 2024, Domain is expecting an expansion in Ebitda margins due to price increases and higher volumes. However, it anticipates that continuing operations costs will rise in the mid- to high single digits.
–By Stuart Condie