Shares in Gold Coast developer Villa World dive after warning of deteriorating market conditions

Shares in Gold Coast-based developer Villa World dived close to 15 per cent today after the company warned that market conditions are deteriorating and failed to issue full-year guidance.

SHARES in Gold Coast-based developer Villa World dived close to 15 per cent today after the company warned that market conditions are deteriorating and failed to issue full-year guidance.

The Broadbeach-based company, which is developing Arundel Springs on the Gold Coast, said in a statement that sales had been impacted by a reduction in finance for residential housing, with customers taking longer to be approved and facing stringent conditions.

“Additionally a number of stages in the company’s Victorian projects are scheduled for completion late in 2H19,” Villa World said.

“There is a risk that some settlements from those stages may now move into 1H20.

Villa World targets many of its products at first-home buyers. Pictured is the 714-lot masterplanned Killara community at Logan Reserve.

“As a result of these issues the company will not achieve its FY19 net profit after tax of $40 million. With an uncertain outlook for the sector, the company considers it prudent to provide no guidance for FY19 at this time and will update the market as necessary during 2H19.”

Shares plunged almost 15 per cent in intraday trading, however they clawed back some ground to be 11.6 per cent, or 21.5c, lower by 2pm (AEST).

Villa World announced a full-year profit for FY18 of $43.6 million.

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It is giving guidance of between $16 million and $17 million for this half and expects to pay a half-year dividend of 8 cents per share (cps)

It will review its full-year dividend guidance of 18.5cps, but said it expects to continue to make them in line with its policy of a payout ratio of between 50 and 75 per cent of NPAT.

Villa World Managing Director and Chief Executive Officer Craig Treasure.

“Challenging market conditions are part of the cyclical nature of our industry,” Villa World said.

“The company remains confident that our medium-to-long term strategy and affordable price point, will provide sustainable success and shareholder value beyond the current sector dynamics.”