Stockland earnings more than double as residential sales jump
Stockland chief executive Tarun Gupta says the company expects expect strong earnings growth in FY26. Photo: Dominic Lorrimer

Stockland earnings more than double as residential sales jump

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First home buyers pouring back into Stockland’s “very, very price sensitive” market as borrowing costs fall pushed quarterly sales to their highest level in 2 ½ years in June and demand would increase on the back of further expected interest rate cuts, chief executive Tarun Gupta said.

Conditions had turned around in Victoria, which makes up 35-40 per cent of Stockland’s residential business, and building costs had fallen back in line with inflation – and were even negative in some cases – positioning the company for a step-change in new-home production, Gupta said.

Stockland chief executive Tarun Gupta says the company expects strong earnings growth in FY26.
Stockland chief executive Tarun Gupta says the company expects strong earnings growth in FY26. Photo: Dominic Lorrimer

“Affordability is improving,” he told The Australian Financial Review on Wednesday, after reporting stronger than expected full-year earnings.

“[After] the first cut [in February], we saw a little bit of inquiry pick up. [With the] second cut [in May], the other states started to go and Victoria started to move. Since the third cut [last week], July to June inquiries are up about 50 per cent. We’re still tracking how sales will translate, but definitely a lot more home buyers are out looking.”

The comments by Stockland – now actively trading homes in 15 communities across Victoria, Queensland, NSW and WA after taking on 12 estates from rival Lendlease in a $1.3 billion deal last year – paint a positive national picture after housing starts fell by a third after a pandemic-era boom boosted by record low borrowing costs and incentives.

The company also made clear that customers are willing to pay higher prices for new housing. Stockland development head Andrew Whitson said the company had raised selling prices 15 per cent in Queensland, 10 per cent in WA and 5 per cent in NSW over the year.

“We walk away positive,” Citi analyst Suraj Nebhani said after the earnings announcement that flagged “improving medium-term growth outlook driven by an improving residential and capital markets backdrop [and] better-than-expected outcomes from the Lendlease communities acquisition with settlements and pricing ahead of underwriting expectations.”

Investors also reacted positively, pushing the shares up 36.5¢, or 6.4 per cent, to $6.09.

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“People are anticipating some more cuts,” Gupta said. “It’s a more positive environment. Stockland will deliver about 20-25 per cent more homes this year than we did in FY25. So about 9000 homes we’ll be delivering this year – last year was 7000.”

Stockland’s revenue rose 4.8 per cent to $3.1 billion in the year to June and after-tax net profit for shareholders more than doubled to $826 million.

Stockland’s master-planned communities business achieved 6856 lot settlements during the year, up from 5637 a year earlier and above its target range of 6200 to 6700. Net sales volumes rose 20 per cent to 5728 lots.

The ASX-listed developer, builder and investor painted the picture of a recovering housing development sector as it declared a 17.2¢ final dividend, bringing its full-year payment to security holders to 25.2¢, up from 24.6¢ a year earlier.

“Our FY25 financial result was at the top end of our guidance range, and we expect strong earnings growth in FY26,” Gupta said.

“The acquired MPC portfolio is performing ahead of our acquisition assumptions, delivering FY25 settlement volumes above our expectations with new releases from the portfolio being met with strong customer demand.”

The company’s residential operating profit margin of 22.9 per cent was in line with the 23 per cent it achieved a year earlier.

Stockland predicted 7500 to 8000 lot settlements in its master-planned communities business this year with an operating profit margin in the “low 20 per cent range”, largely due to the volume of lower-priced homes it was going to settle in the recovering Victorian market, and fewer in the higher-priced NSW market.

Enquiries and sales in Victoria showed a “material improvement” in the June quarter, while Queensland showed continued demand and sustained price growth, the company said. Demand had moderated in Western Australia, but new releases were selling well. Affordability remained a constraint in NSW but demand remained consistent, the company said.

Stockland said funds from operations per security – an industry measure of earnings – would be in the 36¢ to 37¢ range, up from 33.9¢ in the year to June, distribution per security would be 25.2¢, and gearing would remain within the company’s targeted 20-30 per cent range.

Net tangible asset value per security rose to $4.22 from $4.12. The company benefited from a $220 million gain in valuations of investment properties after a $212 million devaluation in FY24.

Stockland’s diluted earnings per security rose to 34.6¢ from 12.8¢ a year earlier, above the guidance the company repeated at its half-year earnings in February of between 33¢ and 34¢ per security.

The company, for which workplace assets account for just 10 per cent of its capital allocation and are decreasing in favour of residential and logistics projects, said it had entered into an exclusive joint venture arrangement with data centre provider EdgeConneX – a company backed by EQT Infrastructure – to develop, own and operate a portfolio of Australian data centres.

The company already has a 32-megawatt data centre at its MPark development in Sydney’s Macquarie Park. It has also secured power and zoning for more than 100 megawatts of data centre developments for the second stage of the project.