Scentre 1st Half Net Profit Rises, Annual Guidance Unchanged — Update

By David Winning

SYDNEY--Scentre said it remains on track to increase its earnings and distribution this year, shrugging off the impact of elevated inflation and a slowing economy.

Scentre, which owns and operates 42 Westfield branded shopping centers, reported a net profit of 403.9 million Australian dollars (US$272.6 million) in the six months through June, up from A$149.4 million a year ago. Funds from operations rose by 2.1% to A$568.2 million in the six-month period.

Management kept its annual guidance unchanged as hopes for an early cut in interest rates fade. Scentre expects funds from operations--a smoothed measure of operating cash flow that excludes depreciation, amortization and gains on asset sales--of between 21.75 Australian cents and 22.25 cents per security in the 12 months through December. If achieved, that would represent growth of up to 5.4% compared with 2023.

It also continues to forecast a distribution of at least 17.2 cents per security.

Scentre has benefited from consumer habits snapping back in the aftermath of the Covid-19 pandemic, although cost-of-living pressures are a concern. The Reserve Bank of Australia is taking longer than many global central banks to pivot toward loosening monetary policy, with Gov. Michele Bullock revealing that an interest-rate hike was considered at the board's meeting this month.

Still, Scentre said many key operational metrics improved in its fiscal first half, led by an increase in customer visitations to its malls. Occupancy at the end of June was 99.3%, up from 99.0% a year earlier. It had positive new leasing spreads of 1.1%. Gross rent collections in the period totaled A$1.37 billion, while net operating income grew by 3.5% to A$$1.01 billion.

Scentre's result included the shutdown of its Westfield Bondi mall in Sydney in the wake of a knife attack that killed six people along with the assailant. The attack on April 13 led to the mall being closed for five full days.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 20, 2024 19:01 ET (23:01 GMT)

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