February 7, 2018 / 10:31 PM / a year ago

UPDATE 1-Australia's Mirvac says HY profit dips 8 pct, re-affirms FY 18 EPS guidance

(Adds CEO quote, industry performance, index performance)

SYDNEY, Feb 8 (Reuters) - Australian diversified landlord and property developer Mirvac Group said on Thursday its half-year profit fell 8.0 percent due to lower property revaluation gains in the investment portfolio.

Statutory profit was A$465 million ($363.6 million) compared to A$508 million a year ago. Operating profit, which excludes one-off items, fell 7.0 percent to A$215 million.

The profit was also hurt by a weak performance from the residential development, with core earnings from the segment falling nearly 50 percent.

“There will be a strong skew of earnings to the second half of the financial year due to the timing of residential settlements,” said Mirvac’s Chief Executive Officer Susan Lloyd-Hurwitz.

Llyod-Hurwitz added that sales activity remained challenging in Sydney and Melbourne.

Like others in the sector, Mirvac has posted profit rises for years, thanks to a steady population growth and record-low interest rates stoking housing demand. A booming property market on the east coast and tight office occupancy rates in Sydney and Melbourne especially has meanwhile boosted the book value of portfolios across the board.

But signs of a slowdown are starting to show.

Once rising home prices are now flat or falling across Australia’s major cities. Retailers are squeezed as record-high household debt and sluggish wage growth crimp consumer spending.

Shares in sector’s benchmark index have slipped 12 percent since mid-December, dropping even before Monday’s broad-based selldown, as investors look for yield and stock price gains elsewhere.

The company announced an interim payout of 5.0 Australian cents per stapled security, in-line with a forecast by brokerage CLSA. It held full-year earnings per share guidance at between 15.3 cents and 15.6 cents.

In a separate statement, Mirvac announced plans to initiate an on-market buy-back program for up to 2.6 per cent of its securities on issue. ($1 = 1.2788 Australian dollars) (Reporting by Chandini Monnappa, additional reporting by Tom Westbrook; Editing by Toby Chopra)

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