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UPDATE 2-Big Yellow sees slow recovery in muted housing market
May 24, 2011 / 6:29 AM / 6 years ago

UPDATE 2-Big Yellow sees slow recovery in muted housing market

* Demand affected by current market conditions - CEO

* Says on the lookout for site acquisitions in London

* FY adj pretax profit 20.2 mln stg vs 16.5 mln stg yr ago

* Shares down 3 pct (Adds comments by CEO in paragraph 3,4,5, analyst in penultimate paragraph; updates share movement)

By Anirban Sen

BANGALORE, May 24 (Reuters) - UK self-storage company Big Yellow Group Plc said a recovery in the sector was unlikely until the economy improves, bringing its shares down 3 percent.

Some analysts fear that high unemployment, negative real income growth, high debt levels and difficulties in obtaining credit will continue to weigh on the housing market that will hit house movers, who are storage companies’ biggest customers.

“In the UK, at the moment we’re operating in a very subdued environment, where the economy did not really do very much since September,” Chief Executive James Gibson said in an interview.

Gibson said the current economic conditions had slowed down demand for the company, which generates much of its revenue from house movers.

“It is a flexible space product if you like...and that demand does have some dependency on activity in the economy,” Gibson said.

Big Yellow, whose stores are mainly in London and South-East England, also plans to open three new stores this year and is on the lookout for site acquisitions in London, Gibson said.

The company, which has 63 stores and another seven in development, raised its final dividend by 25 percent to 5 pence a share, bringing the full-year dividend to 9 pence a share, it said in a statement.

April-March adjusted pretax profit rose to 20.2 million pounds ($32.8 million) from 16.5 million pounds a year ago.

Revenue rose 7 percent to 61.9 million pounds, with store revenue up 8 percent to 59.6 million pounds. Adjusted net assets per share were down 1 percent to 449.8 pence.

Peel Hunt, which reduced its price target to 390 pence from 424 pence but maintained its “buy” rating on the stock, termed the results “marginally disappointing” and said that conditions would remain tough for self storage firms.

Shares in Big Yellow, whose peers include Safestore and Lok‘n Store , were down 11.4 pence at 333 pence at 1015 GMT on the London Stock Exchange, making the stock the top percentage faller on the FTSE mid-cap index . ($1 = 0.616 British Pounds) (Reporting by Anirban Sen in Bangalore; Editing by Don Sebastian) (; within UK +44 207 542 7717; outside UK +91 80 4135 5800; Reuters Messaging:

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