Rise of online shopping helps drive up Segro profits

COMPETITION among retailers for short delivery times and increasing online spending has driven industrial property developer Segro’s pre-tax profits up by 4.9pc.

The company, which provides warehouse space for retailers, parcel delivery companies and third-party logistics providers, said pre-tax profits stood at £686.5m, up from £654.4m in 2014. Its portfolio was valued at almost £5.8bn, 11.75pc higher than in 2014.

Segro said its portfolio had been boosted by increases in rental costs, particularly in Britain.

The FTSE 250 company’s final dividend increased by 3.9pc to 10.6p.

David Sleath, the chief executive, said the company was building its land bank to respond to demand coming from companies such as Amazon, which are increasingly looking for more space in urban locations to fulfil shorter and shorter delivery times.

“A lot of brownfield land is being converted for alternative uses, particularly residential, and our challenge is finding land to meet these requirements,” he said.

Segro said it has projects in progress that could deliver an annual rental in- come of around £109m over the next five years.

It is investing £719m in its portfolio, focused on developing new assets, adding to its land bank and making acquisitions, particularly in northern Italy, the Netherlands and the UK.

Mr Sleath added: “The outlook for occupational demand remains encouraging and the new year has started well, with a healthy pipeline of lettings and new development opportunities.”

He also said he was confident Segro’s portfolio could outperform the wider property market.

Analysts at Liberum said the figures were ahead of consensus and had been driven by higher-than-expected rental growth in Europe.

UBS said structural changes in online and convenience retailing were driving demand for warehouses.