Australia's Mirvac loses most in 4 years after wider annual loss, bleak forecast
By Ayushman Ojha
Aug 8 (Reuters) -Shares of Mirvac Group MGR.AX posted on Thursday their biggest intraday drop in more than four years, after the Australian property dealer reported a wider annual loss and also flagged lower earnings estimate for the upcoming year.
Mirvac's stock was down nearly 13% in early trade, and marked its worst intraday percentage loss since March 19, 2020.
The company's loss attributable for fiscal 2024 came in at A$805 million ($525.02 million), compared with a loss of A$165 million last year.
Analysts at Jarden said even though the results were broadly in line with their estimates, the company's underlying performance came in weaker than expected.
"Earnings are expected to be lower next year, reflecting the impact of a lower contribution from our development business and higher net interest costs related to development activities," Mirvac said in a statement.
The company's gross margin at its residential division was below its target range of 18% to 22% due to higher costs across apartment projects in New South Wales. It expects this trend to continue throughout fiscal 2025, with Queensland projects to be affected as well.
"While market conditions are likely to remain challenging in FY25, we are setting ourselves up for recovery," Mirvac CEO Campbell Hanan said.
The company forecast an operating profit of between A$0.12 and A$0.123 per share, 13% below Jarden's estimate and nearly 11% lower than Citi's view.
"Residential sales and settlements remain under pressure and margins will likely be impacted by skew towards apartments and settlement delays," according to Jarden analysts.
Mirvac shares, which have fallen nearly 12% this year, are expected to trade sideways until further clarity on the earnings growth outlook is provided, according to Citi.
($1 = 1.5333 Australian dollars)
Reporting by Ayushman Ojha; Editing by Sherry Jacob-Phillips
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