AVJennings optimistic despite profits hit

Bushfires and COVID-19 sent AVJennings profit lower by almost half compared with last financial year.

Apartment revenue was down 76.8 per cent.

AVJennings chief executive Peter Summers is optimistic government stimulus and support will bolster the home building sector over the year ahead after profit almost halved last financial year.

After a strong finish to the 2019 calendar year, the early onset of the Australian bushfire season and the COVID-19 pandemic hit the house and land developer’s bottom line. Profit before and after tax each fell 45 per cent over the 2020 financial year, while revenue was also down 11.5 per cent to $262.4m

Mr Summers said that while the year ahead remained “volatile and uncertain”, there were already signs that the federal government’s HomeBuilder scheme and stamp duty concessions on offer by some state governments were beginning to have an impact. Since the announcement in early June, 173 new contracts had been signed.

He said he anticipated that the Victorian lockdowns would add pressure to extend the federal grant scheme into next year.

“With all of this uncertainty, it is going to be vital that governments at all levels provide confidence, certainty and support. HomeBuilder was a welcome announcement and while such schemes rarely create demand, they can certainly provide timing stimulus,” Mr Summers said.

“To date, the federal government in particular has shown a desire to play a strong role in our recovery and all governments have or are expected to announce significant public sector initiatives.”

“I think, when it (HomeBuilder) was first brought in, we all had a bit of a concern as to whether it was a bit too rushed in terms of a deadline. I would expect that within a month or so there‘ll be considerable pressure to extend next year and my read is the government is open to whatever might transpire going forward.”

Uncertainty in March as the virus spread through Australia and New Zealand in the first wave caused the company to sharply wind back physical production to conserve cash. The company’s pre-tax result included a $1.6m boost from JobKeeper.

AVJennings said it planned to continue to focus on domestic demand.

Revenue from land and housing finished 4.9 per cent higher than the financial year prior following the superlot pre-sales at AVJennings’s Auckland project at Hobsonville and improvements in the Queensland business.

Apartment revenue, however, was down 76.8 per cent, linked to the timing of project deliveries

No dividend was declared for the full year.