Westfield owner and operator Scentre has recorded a 41.8 per cent drop in its annual statutory profit
Scentre’s annual result saw a full year profit of $174.9 million, after booking an unrealised $1 billion writedown on the value of its shopping centre portfolio during that period.
Strong leasing activity across Westfield malls, is seen as a positive by the French owners Scentre expected.
“Sales don’t really need to grow all that much to generate incredible demand for space from businesses wanting to compete for those sales.”
The strong sales performance, combined with shopper visits increasing 6.7 per cent year-on-year to 513 million allowed the Westfield mall operator to increase rents by 7.5%.
Scentre shares rose 2.18% $3.04 by midday.
Year -on-year sales were vaverage coming in at 3.5% for the final quarter of 2023 despite a record Boxing Day performance.
Year-on-year sales growth moderated further to 2 per cent for the month of January.
Specialty sales growth for final quarter of 2023 slowed to 3.1 per cent, compared with 4.8 per cent for the full year.
In the department store fashion, footwear, jewellery, and homewares categories sales fell.
The AFR reports that Jarden analyst Lou Pirenc, claims that Scentre’s strong leasing metrics meant the listed shopping centre operator was well-positioned to weather a slowdown in consumer spending.
Moody’s analyst Saranga Ranasinghe said Scentre remained credit positive for 2023 off the back of earnings growth but warned the company would have to maintain a prudent balance sheet to cover the interest due on its outstanding debt.
“We expect the higher-for-longer interest rate environment to pressure the interest coverage ratio, which is currently near the rating threshold with minimal headroom,” Ms Ranasinghe said.
As of 31 December, the group’s portfolio is valued at $34.3 billion.
Scentre’s annual result also revealed revenue increased 2.1 per cent year-on-year to 2.51 billion, with funds from operations increasing 5.2 per cent year-to-year to $1.09 billion.
Distributions for 2023 increased 16.6¢, up 5.4 per cent, which was above guidance.
Source: ASX
