Land Securities Group ((LDSCY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Land Securities Group showcased a robust operational performance, highlighted by significant growth in income and earnings per share (EPS). The company successfully executed asset sales to bolster future income growth and provided optimistic guidance for the near term. However, there were some concerns regarding the decline in Net Tangible Asset (NTA) per share and the impact of asset disposals on EPS.
Strong Like-for-Like Income Growth
Landsec reported a notable 5.2% growth in like-for-like income, with occupancy levels reaching a decade high. This growth underscores the company’s effective management and strategic positioning in the market.
EPS and Dividend Growth
The earnings per share increased by 3.2%, accompanied by a 2.2% rise in the interim dividend. This growth reflects the company’s commitment to delivering value to its shareholders.
Significant Capital Recycling
Landsec executed the sale of nearly GBP 650 million worth of assets that generated limited or no return. This strategic move aims to enhance future income and EPS growth by reallocating capital to more lucrative opportunities.
Office and Retail Occupancy
The company achieved impressive occupancy rates, with office occupancy nearing 99% and retail occupancy climbing to almost 97%. These figures highlight the strong demand for Landsec’s properties.
Positive Guidance for Future Growth
Landsec raised its guidance for EPS growth to the top end of the 2% to 4% range. The company anticipates future growth in retail income and cost savings, reinforcing its positive outlook.
NTA Per Share Decline
Despite the overall positive performance, the NTA per share experienced a decline of 1.3%, primarily due to the sale of low-returning assets. This decline is a point of concern for some investors.
Net Debt to EBITDA Increase
Net debt to EBITDA increased as expected; however, Landsec aims to reduce this ratio below 7x within the next two years, demonstrating its focus on maintaining financial health.
EPS Impact from Disposals
The disposal of Queen Anne’s Mansions is projected to reduce reported earnings for the year by GBP 7 million, impacting the company’s short-term financial metrics.
Forward-Looking Guidance
Landsec’s forward-looking guidance is optimistic, with expectations for like-for-like income growth to reach around 4% to 5% for the year. The company plans to achieve over GBP 10 million in overhead cost savings by the next financial year and aims to reduce capital employed in predevelopment assets by GBP 0.3 billion within the year. Despite a slight dip in NTA per share, the outlook for EPS growth remains strong, driven by robust retail income growth and reduced development exposure.
In summary, Land Securities Group’s earnings call reflected a strong operational performance with significant growth in key financial metrics. While there are concerns about the decline in NTA per share and the impact of asset disposals on EPS, the company’s strategic initiatives and positive guidance provide a promising outlook for future growth.