Summerset quarterly sales drop 18% from record a year earlier

Friday 7th July 2017

Summerset Group posted an 18 percent drop in second-quarter sales from a record year-earlier period although the retirement village operator and developer says its building programme is set to deliver more units later in the year.

Wellington-based Summerset sold 152 occupation rights agreements in the three months ended June 30, down from 185 a year earlier, it said in a statement. Of that, new sales dropped 24 percent to 82, the fewest since the first quarter of 2016, while resales slipped 9 percent to 70.

"New sales were driven by delivery timings for newly constructed retirement units, with 171 built over the first half of 2017 compared to new sales of 179," chief executive Julian Cook said. "Resales continue to track well with available homes being sold quickly."

Last month Summerset said underlying earnings could rise as much as 33 percent in calendar 2017 as strong demand bolsters sales of its retirement village units.

The company's year-to-date sales are tracking ahead of 2016 at 323 compared to 306, with new sales largely flat at 179 and resales up 17 percent to 144.

Cook said the company is on track to build 450 new retirement units across its national footprint this calendar year, with much of the development pipeline coming in the second half of 2017.

"We expect new sales levels over each half of the year to reflect this, as signalled in our construction programme earlier this year," he said. "We continue to see strong demand for our retirement units and presales levels and settlement rates both continue to track positively."

Summerset operates 21 villages across the country and has six further sites under development.

The shares last traded at $4.72 and have edged up 0.9 percent so far this year, lagging behind the 11 percent gain on the S&P/NZX 50 Index over the same period. The shares were sold at $1.40 in its 2011 initial public offering.

(BusinessDesk)

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