Summerset expects 1H underlying profit to be up to 16% lower

Summerset Group expects underlying profit for the six months to June 30 to be between $40 million and $45m. Photo / Stuart Munro

Summerset Group said its first-half underlying profit could be up to 16 per cent lower on the year before because of the impacts of Covid-19, which halted construction as well as property settlements.

The retirement village operator and developer said it expects underlying profit for the six months to June 30 to be between $40 million and $45m.

"Relative to 1H19 underlying profit, this guidance is between 6 per cent and 16 per cent lower," it said.

Summerset delivered 139 new retirement units in the first half. The lockdown saw construction at 13 sites across the country close for six weeks, it said in a statement.

In a separate release, Summerset reported 123 sales for the quarter ending June 30, comprising 58 new sales and 65 resales. First-quarter sales stood at 141, with 70 new sales and 71 resales.

It noted the quarter included the four weeks of full lockdown with "prospective residents unable to visit our villages and property settlements suspended."

Since then, however, "sales and settlements have largely recovered and we are seeing sales enquiry and sales rates marginally stronger than is typical for this time of year," said chief executive Julian Cook.

Overall, the company was "pleased with the result given the circumstances."

"At this stage, given trading conditions, the directors anticipate being in a position to pay an interim dividend," Cook said.

In late March, Summerset lowered its 2020 build rate to 300-to-350 units from 400, assuming disruption to construction activity for up to three months. It also said it was unable to provide guidance, "given the uncertain environment."

Today Cook said the company remains on track to reach that revised year-end build target.

He also reiterated that Summerset continues to ensure it has strong financial management disciplines in place with close to $350m of unused funding capacity available.

The stock last traded at $6.76 and has gained 22 per cent over the past 12 months.