Listed homebuilder Simonds Group (ASX: SIO) edged back into the black in the first quarter of FY24 with the Melbourne-based company crediting cost-cutting and improved trading conditions for the turnaround.
The company, ranked seventh largest homebuilder in Australia by the HIA last month, reported underlying EBITDA of $5.1 million for the three months to the end of September to deliver a modest $100,000 net profit after tax for the period.
The improved performance compares with EBITDA of $11.4 million and a net loss after tax of $23.3 million in FY23 – or more than double the $9.7 million loss from the previous year.
The FY23 result, delivered on revenue of $722.4 million, was impacted by adverse weather conditions as well as input cost increases.
The latest quarter was delivered on revenue of $174 million with the company citing a ‘significant reduction in operating costs as well as improving site start margins’ for the result.
Simonds Group recorded 1,951 site starts in FY23, which was 425 less than the previous year as rising interest rates hit demand and drove contract cancellations higher.
The company announced in April plans to shave back costs in order to ‘right size’ the business.
Simonds says gross margins have improved as ‘older, less profitable jobs are being settled and a higher portion of recently sold jobs go to site’.
“I’m pleased to see that after a challenging period for our industry, the hard work of the whole Simonds team is now being reflected in improved financial results,” says Simonds Group executive chair Rhett Simonds.
“The combination of higher margin jobs going to site, a laser-like focus on operating costs and early traction in our new channels have underpinned the positive earnings outcome reported today.
“Whilst the industry still faces a number of challenges, we are confident about the opportunities ahead for Simonds.”
When announcing the FY23 results in August, Simonds reported that build times and productivity had started to improve for the company as supply chain challenges eased and the industry moved past ‘peak construction’.
Simonds Group late last year fortified its balance sheet through a $25.5 million entitlement offer. At the end of June this year, the company had available liquidity of $39.3 million, comprised of $15.1 million in cash and unused banking facilities of $24.2 million.
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