August 21, 2019 / 12:07 AM / 2 months ago

UPDATE 2-Australia's Stockland sees no firm signs of property recovery; shares drop

* Annual profit slumps nearly 70%

* Shares hit nearly seven-week low

* Co flags flat growth in fiscal 2020 (Recasts, adds comments from CEO & analyst, share movement)

By Aby Jose Koilparambil and Shreya Mariam Job

Aug 21 (Reuters) - Stockland Corp’s annual net profit plunged nearly 70% and the Australian residential developer also warned that there were no firm signs of recovery in the cooling housing market as yet, sending its shares down 5% on Wednesday.

The downbeat forecast comes at a time when it appeared that the country’s housing market started rebounding in June, after dropping every month since late 2017.

Signs of higher demand in June from Sydney and Melbourne had stoked hopes that Australia’s once-booming housing market might survive the steep property downturn; but a spurt in late mortgage payments and cautious forecast by developers implied a growing uncertainty.

“Despite an improvement in residential enquiry and the market bottoming, we expect the market to take some time to normalise as customers continue to experience challenges achieving loan approvals,” Chief Executive Officer Mark Steinert said in a statement.

Tepid wage growth and weak consumer sentiment are likely to retain uncertainty in the property market, the statement said.

Shares in Stockland dropped as much as 5.2% to a near seven-week low of A$4.360.

“The management still does not see a perceptible change in the sentiment with regard to recovery in property, and the market has not embraced the rhetoric Stockland has put on the table,” James McGlew, executive director of corporate stockbroking at Argonaut.

Stockland’s cautious view contrasts with a more positive outlook offered by real estate classifieds platform Domain Holdings Australia and construction firm Lendlease Group earlier this month.

Stockland said it expects flat growth in funds from operations per security, a measure of profitability, in fiscal 2020.

Statutory profit for the year ended June tumbled to A$311 million ($210.70 million) from a profit of A$1.03 billion a year earlier, dented by devaluations in certain portfolios.

Retail town centre, which accounts for most of the commercial property revenue, suffered a devaluation, which totalled A$474 million for the year, due to harsh market conditions.

The company declared a distribution per security of 27.6 cents, and said it expects distribution payouts at the bottom-end of the 75%-85% target ratio.

$1 = 1.4760 Australian dollars Reporting by Shreya Mariam Job and Aby Jose Koilparambil in Bengaluru; Editing by Bernard Orr and Sherry Jacob-Phillips

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