Stockland outlines strategic plan

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Stockland Group (SGP.AX) released a statement (link opens as PDF) today outlining the outcomes of its most recent strategic review.

At risk of stating the obvious, Managing Director and CEO Mark Steinert laid out Stockland’s objectives for the quarters to come:

“We have a clear objective to deliver EPS growth and total risk-adjusted shareholder returns above the sector average. We will strive to generate reliable earnings, while steadily increasing return on assets, earnings per share and distribution over time.”

Looking ahead, Steinert assured investors that his company would remain broadly diversified in its core assets in shopping centres, residential living, and retirement living, but would increase its exposure to industrial property in the coming years.

The release identified five main priorities for the company:

  • Improve profitability of Residential business
  • Improve return on assets of Retirement Living business
  • Reduce overhead and increase efficiencies
  • Reallocate capital to strengthen the overall business
  • Grow Commercial business through development and acquisition

The Australian REIT will remain committed to a strong balance sheet with 20% to 30% gearing, and expects to pursue additional capital partnering opportunities as it shifts $500 million from its Trust to Corporation entity.

This most recent strategic update coincides with the company’s Q3 results, which were generally in line with expectations. But tight margins kept celebrations to a minimum, despite upticks in retail sales and residential love volumes. Looking ahead, the company’s restructuring provision will put FY 2013 EPS at 75% of last year’s earnings, the lower end of its initial guidance. Despite the lackluster forecast, Stockland expects to maintain its current $0.24 distribution.

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