The Westfield Group will continue to rely on its overseas developments to drive earnings after indicating it was feeling the pressure of the softening retail market in Australia.
The property developer, which has portfolio comprising of 100 shopping centres in four countries, reported a 35.7 per cent drop in its interim net profit to $515 million.
Westfield Group co-CEOs, Peter Lowy and Steven Lowy said:
“The results for the half year were in line with forecast, reflecting the solid performance from the portfolio, good progress on the current and future development pipeline, and the continuation of asset divestments and buyback of securities.
“These results highlight the benefits of the continuing implementation of the Group’s strategic plan focussing on the high quality portfolio and managing our capital efficiently in order to position the Group to generate greater shareholder value.”
During the period, the group established a US$1.2 billion joint venture over a portfolio of six existing malls in the US, formed a joint venture for the redevelopment of Croydon in London, and divested its 50 per cent joint venture interest in Brazil.
The group has also continues to make progress on its $2.8 billion current development projects, including the retail development of the World Trade Center in New York, the redevelopment of Miranda in Sydney, Mt Gravatt in Brisbane, Garden State Plaza in New Jersey and Montgomery in Maryland.
There are also over $12 billion in the development pipeline, including Milan and Croydon, the expansion of Westfield London and the redevelopments of Century City and Valley Fair in California, and Chermside in Brisbane.
“The group’s strategy is to develop and own superior retail destinations in major cities by integrating food, fashion, leisure and entertainment and by using technology to better connect retailers with consumers,” the Co-CEOs said.
For the six months, comparable property net operating income for the Group was up 2.7 per cent on the prior period with the United States up 4.3 per cent, Australia and New Zealand up 1.8 per cent and the United Kingdom up 0.2 per cent. The global portfolio at 30 June 2013 was 97.8 per cent leased, up 30 basis points on June 2012.
Comparable specialty retail sales for the half year were up 4.3 per cent in the United States and up
0.9 per cent in Australia and New Zealand.
The group also said it will continue to evolve its digital business strategy, which forms an integral part of the broader objective of better connecting retailers and consumers and enhancing the overall shopping and entertainment experience
“We have confidence in the Group’s business model and opportunities for growth,” the co-CEOs said.
“We are focussed on remaining at the forefront of our industry as we continue to improve the quality of our portfolio through our current development activity and future pipeline, together with acquisition opportunities in existing and new markets. We also plan to continue redeploying capital from further joint ventures and non-core asset disposals.”