Builder looks beyond profit dip

HOME builder AVJennings has shrugged off a drop in fullyear profits, saying it has a strong pipeline of projects that will start to boost revenue and earnings within two years.

AVJennings managing director Peter Summers expects more contracts for new homes to be signed in 2017/18 but said new projects will take longer to recognise a profit on.

“In terms of revenue and earnings, it is in 2019 and 2020 — those financial years — that they will all be impacting the strongest,” Mr Summers said as AVJennings delivered its 2016/17 results yesterday.

For the current financial year, the company expects to secure contract signings for 1900 to 2100 lots — up from 1843 lots in 2016/17.

Demand for land, houses and apartments remains strong, especially in Sydney, Brisbane, Melbourne and Auckland, as consumers continue to take advantage of low interest rates and low inflation.

The company also is exploring opportunities to supply social housing. AVJennings’ net profit for the year to June 30 dropped 12.7 per cent to $35.7 million but the company says it has strong momentum.

Mr Summers said work-inprogress continued to rise in the 2016/17 financial year — up by 28.6 per cent — as did the number of contract signings, especially in the second half.

He said profit in 2016/17 was lower because projects that had driven growth in prior years had reached more mature levels, and new projects of significant scale were started but will take time to reach profit recognition. Also, heavy rain on the east coast of Australia and delays in title issuance delayed construction and contract settlements.