WESTFIELD GROUP REPORTS FULL YEAR EARNINGS OF $1.53 BILLION WITH INCOME GROWTH FROM ALL REGIONS
15 February 2012
The Westfield Group (ASX:WDC) today announced its full year results to 31 December 2011 with AIFRS net profit for the year of $1.53bn, up 37.6% on prior year and Funds from Operations (FFO) of $1.49bn or 64.8 cents per security.
Westfield Group Co-CEOs, Peter Lowy and Steven Lowy said: We are pleased with the result, which was at the upper end of our earnings forecast range, having absorbed the Australian Dollars 12% appreciation to the US Dollar and 8% appreciation to the UK Pound over the year.
The result was driven by net property income increasing 7% during the year, a 100% increase in the Groups property management income and a 92% increase in project income. Return on contributed equity was 11.4% for the year.
2011 was a significant year for the Group. We continued to implement our strategy of increasing return on equity with the joint venturing of the 1.75bn Stratford City and the sale of Cairns (Australia) and Nottingham (UK), the Co-CEOs said.
Importantly, we expanded our business platform into strategic new markets with our entry into Brazil as well as our investment in major iconic retail development projects in Milan (Italy) and at the World Trade Center in New York.
We continue to look at attractive development and acquisition opportunities globally, and are well placed to deliver long term sustainable earnings growth.
The Groups AIFRS net profit for the year included property revaluations of $476m of which $129m were development gains.
Distribution for the 12 months was $1.11bn or 48.4 cents per security, in line with forecast. The Group will retain $377m, which will be invested in WDCs future capital activities.
WDCs current assets under management of $61.7bn include 118 shopping centres in 5 countries with around 24,300 retailers. At 31 December 2011, WDC had total assets of $38.8bn, a gearing ratio of 36.4% (pro forma) and available liquidity of $5.3bn. The identified pipeline of future development work is approximately $11bn, of which the Groups share is between $5bn and $6bn.
The Group expects to achieve FFO for the 2012 year of approximately 68 cents per security. This forecast is prior to the impact of the transactions separately announced today. The forecast also assumes no material change in foreign currency exchange rates.
The Group forecasts an increase in distribution for the 2012 year to 49.5 cents per security from 48.4 cents per security in 2011.
We are focussed on investing the Groups capital in highly productive shopping centres with strong franchise characteristics that are resilient through economic cycles. We are confident in the future of the Groups business model and opportunities for growth. We will continue to appropriately manage our invested capital position, including introducing further joint ventures and dispositions of non-core assets, to deliver sustainable earnings growth and higher return on equity, the Co-CEOs said.
For the year, net property income, in local currency terms was up 8% in Australia / New Zealand, up 1% in the United States and up 36% in the United Kingdom.
Our operating performance saw income growth and comparable specialty sales growth in each of our regions. Steven Lowy said.
Particularly pleasing was the record volume of leasing activity during the year, with over 5,100 leases agreed covering over 960,000 square metres of retail space. This highlights the retailer demand for our high quality portfolio globally.
The portfolio at 31 December 2011 was 97.5% leased, with the United States portfolio at 93.1%, the United Kingdom at 99.0% and the Australian / New Zealand portfolio remaining over 99.5%.
In the United States, comparable specialty retail sales for the 12 months to December 2011 were up 7.1%, with sales in the December quarter up 9.8%. In Australia, comparable specialty retail sales for the 12 months were up 1.5% and up 1.9% in New Zealand, with the strongest performance in both Australia and New Zealand being in the December quarter up 2.0% and 4.8% respectively. At Westfield London, sales for the year were over 960m, up 10.8%.
In Brazil, the Groups new joint venture, Westfield Almeida Junior, continues to perform well with results at the three operating centres in line with expectations and good progress being made at the two projects under development. The joint venture also continues to examine new opportunities.
Currently, the Group has $2.4bn of projects under construction, with WDCs share being $1.3bn. WDCs cost to complete these projects is approximately $300m.
Stratford City, in east London successfully opened during the year. This iconic centre is the largest urban shopping centre in Europe and is adjacent to the London 2012 Olympic venue. The centre has performed exceptionally well with over 13.6m shopping visits in its first 14 weeks from opening to 31 December 2011.
At Westfield Sydney, the world class retail centres strong trading performance continues with the new centre already achieving the highest specialty sales productivity in WDCs global portfolio.
During the year, WDC commenced work on $760m of new projects including Fountain Gate in Australia and UTC in San Diego. Good progress continues on all projects underway.
The Group expects to commence between $1.25bn and $1.5bn of new developments in both 2012 and 2013, with the Groups share being between $500m and $700m in each of those years.
The Westfield Group (ASX Code: WDC) is an internally managed, vertically integrated, shopping centre group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities and employing over 4,000 staff worldwide. The Westfield Group has interests in and operates one of the world’s largest shopping centre portfolios with investment interests in 118 shopping centres across Australia, the United States, the United Kingdom, New Zealand and Brazil, encompassing around 24,300 retail outlets and total assets under management of A$61.7 bn.
This release contains forward-looking statements, including statements regardingfuture earnings and distributions. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. You should not place undue reliance on these forward-looking statements. These forward-looking statements are based on information available to us as of the date of this presentation. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update these forward-looking statements.