Balwin recovers from tough first half

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Balwin recovers from tough first half

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Published Date: 2021-03-31 | Source: Stephen Gunnion | Author: Stephen Gunnion

Balwin recovers from tough first half

The residential property developer says sales were supported by its online sales platform and record low interest rates.

Balwin Properties staged a second-half recovery after Covid-19 lockdown more than halved earnings in the first half of its financial year.

In a trading update, the residential property developer said it continued to experience strong demand for its apartments last year, despite economic headwinds and market uncertainty caused by Covid-19. No construction activity took place from 26 March last year until the easing of lockdown restrictions to leave 3 on 1 June.

Balwin said it still managed to sell and recognise 2,550 apartments in revenue for the year to end-February, down from the 2,715 units it sold in the prior financial year. It launched an online sales platform, which supported sales during and beyond the lockdown. Sales were also supported by record low interest rates, with demand for one and two-bedroom apartments remaining strong.

The company expected the slightly lower number of apartments sold to translate into an 8% decline in revenue for the year, with earnings and headline earnings per share (HEPS) likely to be 18% to 23% below the 88c it reported last year. In the first six months of its financial year both measures were down by 56% at 17c.

Although cost containment across the business yielded results, operating costs were still expected to rise by about 12% due to increased activity in its Balwin Fibre business. It maintained a healthy cash balance despite a reduction of cash on hand, mainly as a result of a short-term cash timing difference due to continued delays in the timeous registration of apartments and the increased investment into pipeline projects during the year.

Approximately 3,300 apartments were pre-sold beyond the reporting period, an increase of 2,650 apartments forward-sold when compared to the prior financial year.

The company expects to release its annual results on 17 May. Its shares rose 4.6% to R4.60 yesterday.





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