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Summerset expects up to 40% profit increase

BusinessDesk report by Rebecca Howard
Summerset Group lifted full-year earnings guidance on strong resales volumes and margins as well as good margins on new occupation right sales.

The Wellington-based retirement village developer and operator expects underlying profit to be in a range of $77 million-to-$79 million in calendar 2017 versus prior guidance of $72 million-to-$75 million, it said in a statement. That represents an increase on the previous year’s underlying profit of between 36 percent and 40 percent, it said.

The group has delivered average annual underlying profit growth of approximately 46 percent since listing on the NZX in 2011.

“We have seen ongoing strength in resales volumes and margins as well as good margins on new occupation right sales. Sales interest and time from contract to settlement remains very good and we expect this to continue into the new year,” chief executive Julian Cook said.

The company did not provide guidance for net profit “due to the inherent uncertainty in fair value movement of investment property, a key component of this profit measure,” it said.

Summerset has 22 retirement villages completed or in development across the country. It also has seven development sites in different parts of the country and provides a range of living options and care services to more than 4,400 residents.

The stock rose 1.3 percent to $5.30 and has gained 12 percent so far this year.