From Property Observer comes news today that AV Jennings has posted a -$19.1 million loss for the first half of the 2013 financial year compared to a $3.3 million profit a year ago. This follows news earlier in the week that Becton had fallen into receivership as well as the first half loss booked by Stockland earlier in the month.From Property Observer:
The home builder AVJennings has posted a $19.1 million loss for the first half of the 2013 financial year compared to a $3.3 million profit a year ago. But it has advised that consumer confidence remains the key issue and until there was a positive change, market conditions will continue to remain challenging.
The value of its residential projects has had a 5.3% cut, slashing $16 million from its result.
Total lots under control sits at 10,581 for the group whose history stems back to 1932 when “proud old builder” Albert Jennings founded Australia’s most famous house building company which is now publicly listed.
Almost 80% of the impairments related to its troubled Queensland projects…
But the main reduction in revenue occurred in Victoria.
“The Victorian market was overheated during 2010/11 and conditions have since softened considerably.
“Revenues declined by $31.8 million for the reporting period from December 2011 figures, however, margins on Victorian projects remain acceptable and sales performance over the December 2012 and
January 2013 period improved and indicate that market conditions in Victoria appear to have stabilised.”
The company cut the value of a Victorian project, noting that the downturn in that state had “required a more aggressive pricing structure” on the project.
It also cut the value of its Cobbitty, NSW project where bureaucratic red tape had been costly, according to the market update…
“Residential property market conditions during the reporting period were adversely affected by weak consumer confidence which has subsisted for some time now,” Peter Summers said.
“There are signs that some markets are starting to improve although this is taking time to translate into transactions.”
“Consumer confidence remains the key issue and until there is a positive change, market conditions will continue to remain challenging.”
AV Jennings will be happy to know that consumer sentiment has indeed picked-up and is now running above the long-run average (see next chart).
Moreover, increases in consumer confidence typically translate into increased housing activity (see next chart).