McGrath forecasts 40pc lift in underlying profit amid challenging conditions

McGrath forecasts 40pc lift in underlying profit amid challenging conditions

McGrath CEO and founder John McGrath. Photo via Facebook.

Real estate agency operator McGrath (ASX: MEA) has forecast a 40 per cent increase in underlying earnings for the December half-year as the company capitalises on the continued strength of the national property market.

McGrath says that based on trading to date, it expects to record underlying EBITDA of between $4.5 million and $5 million in the first half.

The midpoint of this range would represent a 40 per cent increase on the same period last year, when McGrath recorded underlying EBITDA of $3.41 million.

CEO and company founder John McGrath says the company was ‘performing very well and delivering strong results' for clients and stakeholders.

“We are executing well on our growth strategies, despite challenging economic conditions,” McGrath says.

“We are delighted with the result as this is a testament to our experienced team, superior agents and strong brand.

“We will continue to focus on increased productivity of our agents and growing our office footprint on the east coast of Australia.”

When announcing the company's annual profit result in August, McGrath noted that the group was facing challenges because of historically low listing levels and successive interest rate increases during the year.

The company posted a statutory net profit after tax of $6.2 million in FY23 despite transaction volumes falling about 20 per cent from a year earlier.

Transaction volumes last financial year were also about 5 per cent below the 10-year market average, while house prices fell about 5 per cent during the year.

McGrath reveals today that it has a strong cash position totalling about $22 million, even after taking into account the $5.6 million in dividends paid in September. The company had $27 million in cash at the end of June.

The compnay notes that it has no debt and that it plans to continue providing returns to shareholders ‘through both ongoing dividends and [sic] on-market share buyback program’.

The Sydney-based McGrath has 105 franchise offices and 21 company-owned offices in Queensland, NSW, Victoria and Tasmania.

 Shares in McGrath were up 5 per cent to 42c in late afternoon trading.

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