Residential property development and construction firm AV Jennings says challenging market conditions lie behind a $29 million loss in the half year just gone, and that the short-term outlook for the property sector remains uncertain.
In a statement issued after the market closed for trading on Wednesday – the same day property developer Stockland blamed poor market conditions for a 35 per cent profit slump and one day after Leighton also posted a significant profit drop – AV announced a net loss after tax of $29.8 million.
Company chief executive Peter Summers says difficult conditions continue to impact the industry, adding that the market has yet to feel any significant benefit from interest rate cuts.
“The European debt crisis has impacted worldwide, and whilst it continues to linger without proper resolution, financial and residential property markets will remain under pressure,” he says. “Consumers are looking for some stability and consistency in general economic conditions and, hence, it is more likely any significant improvement will not flow through to the residential property market until later in 2012.”
Summers says that while the company’s short term outlook remained uncertain, AV would be well positioned to take advantage of longer-term recovery brought about by a shortage of housing supply, should such a recovery occur.
AV’s result comes amid increasing pessimism about the immediate future of the residential construction market in Australia. In its latest forecast for the sector, the Housing Industry Association forecasts housing starts of just 133,420 in 2012 and 143,630 in 2013 – the lowest and third-lowest numbers on record respectively over the past 10 years.
The company’s loss also follows the latest Performance of Construction Industry report, which shows that industry profits continue to come under intense pressure as input costs keep rising even as selling prices continue to fall amid weak market conditions.