AVJennings FY24 Financial Results and Strategic Progress
AVJENNINGS LIMITED (AVJ) Share Update August 2024 Tuesday 27th
AVJennings Reports Mixed FY24 Financial Results Amid Strategic Changes
AVJennings Limited has released its financial results for FY24, showing a mix of growth and challenges as the company focuses on strategic initiatives and modernisation.
Instant Summary:
- Revenue increased by 12% to $320M.
- Settlement of 584 retail lots, down 23%.
- Normalised PBT decreased by 44% to $19.4M.
- PBT significantly dropped by 95% to $1.6M.
- No final dividend declared.
- Retail contract signings increased by 70% to 590 lots.
- Customer enquiries up 12%, with a 44% increase in conversion rate.
Financial Performance
AVJennings reported a revenue increase of 12% to $320M for FY24. However, the company's Gross Margin decreased by 18% to $74.3M, and Net Profit After Tax (NPAT) fell to $1.0M from $24.0M in FY23. The Profit Before Tax (PBT) also saw a significant drop of 95% to $1.6M.
The decline in profit was largely due to the termination of the Rocksberg project option, resulting in a write-off of $17.8M in capitalised development expenses and landowners' transaction costs. Adjusting for this, the Normalised PBT was $19.4M, down 44% from the previous year.
Operational Highlights
Despite the financial challenges, AVJennings settled 874 lots, a 15% increase from the prior corresponding period (PCP). The company also saw a 70% increase in retail contract signings, totaling 590 lots, and a 12% rise in customer enquiries. The conversion rate of these enquiries improved by 44%, indicating better quality leads.
Strategic Initiatives
AVJennings made significant strides in modernising its operations. The establishment of the Pro9 Australian factory, which began producing walls in August 2024, is expected to revolutionise the company's business model. The company also focused on capital management by selling non-core assets and raising $30M in equity to support future investments.
The company secured a $30M increase in its Club Banking facility, bringing the total to $330M, providing additional financial capacity for future projects.
Market Outlook
Looking ahead to FY25, AVJennings anticipates continued challenges, particularly in Victoria and New Zealand. The company expects revenue to remain stable but with ongoing pressure on gross margins due to macroeconomic conditions. The Pro9 factory's contribution to earnings is expected to grow gradually over the next year.
The mixed financial results and strategic focus on modernisation are likely to have a varied impact on AVJennings' stock. The significant drop in PBT and NPAT may concern investors, but the company's proactive steps in capital management and modernisation could offset some of these worries. The market reaction is expected to be cautious but not overly negative.
Investor Reaction:
Analysts are likely to have mixed reactions to AVJennings' FY24 results. While the financial declines are concerning, the company's strategic initiatives and focus on modernisation could be seen as positive steps for long-term growth. Investors may adopt a wait-and-see approach, monitoring the company's progress in the coming quarters.
Conclusion:
Investors should keep a close eye on AVJennings' strategic initiatives and their impact on future financial performance. The company's efforts to modernise and improve capital management are promising, but the financial challenges cannot be overlooked. Staying informed about upcoming updates and market conditions will be crucial for making informed investment decisions.