McGrath first half earnings to rise despite east coast lockdowns

McGrath first half earnings to rise despite east coast lockdowns

McGrath CEO Eddie Law.

Listed real estate company McGrath (ASX: MEA) is anticipating a 60 per cent increase in underlying earnings for the first half despite COVID-19 restrictions affecting much of the east coast market, but the same cannot be said for the group’s net profit.

In a trading update posted today, McGrath says underlying EBITDA is expected to be between $10 million to $11 million for the December half - $4 million more than the first half of the prior year.

The company notes statutory net profit after tax (NPAT) is likely to be less than the first half of the prior year due to 1H21 including one-off abnormal items of at least $4 million which contributed to the NPAT at the time.

McGrath CEO Eddie Law says he is pleased with the company’s first half results, noting most of the period was impacted by COVID-19 restrictions.

“We are pleased with our first four month’s performance for FY22, achieved during a sustained period of COVID- 19 lockdown restrictions experienced across our Eastern Seaboard markets. We were able to successfully innovate many of our key processes through these lockdowns, conducting our business operations and transactions through advanced technology and digital solutions,” says Law.

“These solutions include live streamed auctions and virtual property inspections. Ultimately, our goal through all of this has been to keep our people and communities safe and it has been inspiring to see how well our network and our clients adapted to the online environment throughout the lockdowns.

“The fundamentals of the property market remain strong, with liquidity and low interest rates driving buyer demand. As we emerge from the COVID-19 lockdowns, we expect supply will increase over the coming months. Buyer demand may become constrained by affordability, helping to moderate some of the strong price gains we have seen. Our business is well positioned for long-term future growth.”

It comes after McGrath posted a $19 million profit in FY21, up from just $700,000 the year before, as well as $14 million in EBITDA growth during the financial year to hit $30.8 million.

At the time, Law noted that the residential property market was “very resilient” during the COVID-19 pandemic compared with other sectors.

“We are optimistic about the strength of the economy which we anticipate will rebound quickly once high vaccination levels allow businesses to resume operation and international borders reopen,” Law said.

“Naturally the pandemic has highlighted a re-calibration of lifestyle choices that will continue to impact the residential market.”

Shares in MEA are up 3.10 per cent to $0.67 per share at 10.16am AEDT.

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