Metlifecare first-half profit slides 69% as merger gains wash through

Alan Edwards, CEO of Metlifecare
Metlifecare 12-month price history (NZX.com)

Metlifecare [NZX: MET], the retirement village operator and developer which counts the New Zealand Superannuation Fund and Infratil as cornerstone investors, reported a 69 percent drop in first-half profit as the gains from last year's merger with Vision Senior Living and Private Life Care Holding wash through.

Net profit dropped to $26.8 million, or 12.76 cents per share, in the six months ended Dec. 31 from $87.4 million, or 48.51 cents, a year earlier, the Auckland-based company said in a statement. Underlying earnings, which strips out the one-off gains in 2012 and movements in the value of its property portfolio, jumped 77 percent to $15.3 million.

Income gained 6.2 percent to $46.2 million on increased deferred management fees. The retirement village operator reported 19 sales of units and 172 resales, generating cash of $69.7 million. That was down from 59 sales and 192 resales a year earlier when the benefits of the merger were recognised.

"Constrained stock levels in the high demand Auckland area impacted on both sales and resales during HY14, however volumes are expected to rise as new stock from Metlifecare's development pipeline becomes available," it said. "Metlifecare is progressing a number of large development opportunities as it focuses on building its portfolio and achieving its target build rate of 200+ units per year by 2015."

The company is focusing its development in Auckland, Hamilton and Bay of Plenty, which it sees as having large ageing populations in need of quality retirement and aged care facilities.

"We have a number of exciting development projects currently underway and continue to identify and assess suitable land sites, particularly in the upper North Island," chairman Peter Brown said. "The property market within our targeted geographical regions continues to perform well and we are taking a carefully considered approach to land acquisitions in these areas."

Brown said the company is looking at opportunities to build Metlifecare's capabilities and cut costs as it advances its development pipeline.

The board declared an interim dividend of 1.25 cents per share, payable on April 17, with an April 3 record. That's up from an interim dividend of 1 cent per share a year earlier.

The shares fell 1.2 percent to $4.15 yesterday, and have gained 4.8 percent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median target price of $4.31.

(BusinessDesk)

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