Westfield Holdings forecasts 20% profit increase for the 2003 financial year

04 March 2003

Countries: Australia

All dollar values are quoted in $A unless otherwise stated.

Westfield Holdings Limited announced today that, barring unforeseen circumstances, it expects to achieve an after tax profit for the 2003 financial year of around $280 million, an increase of approximately 20% on last year and ahead of the 15% increase in after tax profit forecast by the Chairman, Mr Frank Lowy at Westfield’s Annual General Meeting in November 2002.

Westfield made this full year forecast today when releasing its half-yearly profit result for the six months to 31 December 2002, which included: –

  • An after tax profit of $135.5 million, up 53.2% on the previous corresponding period;
  • Earnings per share of 24.04 cents, up 49.3% on the previous corresponding period;
  • An interim dividend of 12.02 cents per share, up 49.3% on the previous corresponding period. The interim dividend will be 40% franked.

The previous half-year result did not include income associated with the Rodamco North America (RNA) transaction, which positively impacted this half-year result.

The full year forecast represents: –

  • Earnings per share of around 49.5 cents, an increase of around 18% on the previous corresponding period;
  • Earnings Before Interest and Tax (EBIT) of around $400 million, an increase of 13% on the previous corresponding period;
  • Return on Equity of 18.2% compared with 16.7% for the previous corresponding period.

The company has continued to expand its global business during the financial year. Highlights include: –

  • The addition of 3 new properties to the Westfield portfolio at Newmarket (Auckland, New Zealand), Southgate Plaza (Sarasota, Florida) and Fashion Square (Sherman Oaks, California);
  • The completion of $640 million of development projects including Eastgardens (Sydney, Australia), West County and South County (St Louis, Missouri, USA);
  • Receiving outline planning consents for 3 major development projects in the United Kingdom at Derby, Nottingham and Swindon;
  • The addition of $2.1 billion of development projects to the development pipeline.

The group’s development pipeline, representing projects either under construction or expected to start within the next five years, is now $6.3 billion. The company is also working on additional projects valued at approximately $5.0 billion.

Westfield Managing Directors Peter Lowy and Steven Lowy said all parts of the expanded business are operating successfully, in particular, the integration of the 25 new centres added to the portfolio over the last 12 months.

Westfield now manages 111 centres globally with a value of $32.0 billion comprising 17,000 retail outlets and 8.5 million square metres of space.

Australia and New Zealand

During the half year, Westfield successfully completed the $100 million refurbishment and expansion of Westfield Eastgardens in Sydney. Work on the $680 million Bondi Junction project in Sydney continues on schedule.

Work also continues on the $30 million Homemaker Retail Campus at Fountain Gate in Melbourne, the $67 million first stage of the North Lakes shopping centre, in Brisbane’s north and the $60 million redevelopment of Whitford City centre in Perth. In New Zealand, work on the $NZ55 million St Lukes project in Auckland is nearing completion.

Last September, Westfield was appointed developer and manager of the joint venture holdings of Westfield Trust and Auckland One Ltd (the owner of the Two Double Seven shopping centre) in Newmarket, New Zealand valued at NZ$245 million. Newmarket is one of Auckland’s premier retail markets and the combination of the land holdings, representing approximately seven hectares, will allow for development of a major shopping centre on the combined sites.

Planning work is also well advanced for new projects at Doncaster in Melbourne, Centrepoint in Sydney’s CBD, Liverpool in Sydney, Innaloo in Perth, Queensgate in Wellington and Riccarton in Christchurch.

Westfield Trust was recently advised by Coles Myer Limited that it has been selected as the preferred bidder to acquire Sydney Central Plaza, a major shopping centre adjacent and connected to Westfield Centrepoint in Sydney’s CBD. Westfield Trust anticipates that formal agreements will be entered into in the near future.

United States

During the half year, Westfield successfully completed the US$237 million redevelopment of Westfield Shoppingtown West County and the US$60 million redevelopment of Westfield Shoppingtown South County, both in St Louis, Missouri.

In August, work started on the US$134 million redevelopment of Westfield Shoppingtown Oakridge in San Jose, California. The project is expected to be finished in the first half of calendar 2004. Work continues at Westfield Shoppingtowns Palm Desert, California and Great Northern in Cleveland, Ohio (combined project value US$50 million).
In December, Westfield America acquired a 50% interest in Fashion Square Sherman Oaks for US$67 million from a US affiliate of the United Kingdom’s Prudential plc. Simultaneously, Prudential’s US affiliate acquired a 25% interest in Westfield America Inc’s Garden State Plaza for US$193.8 million. In January 2003, Westfield America acquired Southgate Plaza shopping centre in Sarasota, Florida for US$62 million, adding a fourth centre to the Tampa cluster in Florida.
In February this year, Westfield America signed an in principle agreement with listed US REIT, Forest City Enterprises, to redevelop Westfield’s San Francisco Centre together with an adjacent property, the former Emporium department store, which is owned by Forest City. With its combination of downtown location and department stores, the US$380 million project, on completion, is expected to be one of the pre-eminent retail destinations in the US.
In January 2003, Westfield America joined Simon Property Group (NYSE: SPG) in a revised bid for Taubman Center Inc (NYSE: TCO) a leading US shopping centre company. The bid, priced at US$20 per share for all Taubman common stock, was accepted by 85% of common stockholders by the initial close date of 14 February 2003. The offer has since been extended to 28 March 2003.

United Kingdom

During the half year, considerable progress was made with the UK development program. Since July 2002, outline planning consents have been received for 780 million of redevelopment projects at the Broadmarsh centre in Nottingham (400 million), Eagle centre in Derby (200 million) and Brunel centre in Swindon (180 million).

The UK portfolio continued to perform well with occupancy levels in all seven centres in excess of 99%, compared with 95.3% at the time of acquisition in 2000.

Retail sales in the UK generally remained strong throughout the period, up between 3-4% on a like-for-like basis on the previous corresponding half- year period. This has been reflected in the sales achieved in Westfield centres.

Work is progressing on the funding structure for the UK portfolio.


Directors believe that the major expansion of the Group’s global shopping centre business and the continuing growth in size and scope of the development program in all four markets in which Westfield operates provide a strong platform for sustained EBIT and after tax profit growth.

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