Cooler housing market takes bite out of Metlifecare half-year profit
A less rampant real estate market pushed down Metlifecare’s net profit after tax by nearly 66 per cent but that was not reflective of the business making more revenue.
The retirement giant made $56.5 million net profit after tax in the December 31 half-year, down on the $165m in the period a year ago.
Its shares fell 4.6 per cent to close at $5.96.
Asked for his reaction to the profit drop, chief executive Glen Sowry said: “Disappointed? Of course . . . but we did not believe it could keep going like that forever.
“The housing market has returned to more normal levels and that’s reflected in the result,” he said.
Richard Thomson, chief financial officer, concurred, saying the 65.8 per cent drop was because property values increased less than what they had last year and that the first half of last year was particularly unusual.
Like other NZX listed retirement giants, Metlifecare paid no tax, even though a $6.7m provision was made. All tax was deferred due to its big development workload.
Metlifecare has 4230 independent living units and serviced apartments and accommodates 5200 residents under its licence-to-occupy model. After three years of living in a Metlifecare village, the business takes 30 per cent of what residents pay to buy in, calling that a deferred management fee. It is developing three new villages and now owns 24. On average, people buying into an independent living unit stay about eight years.
They are in an apartment an average of about four years and a Metlifecare hospital about six months. Sowry said four villages were estimated to need $44.1m to fix. All had weathertightness issues and some had “minor” seismic issues.
— BusinessDesk