Retirement operator Summerset Group's first half profit is down in line with smaller increases in the value of its properties.
A Summerset retirement village. Photo: Summerset
The company's net profit fell 9.2 percent in the six months ended June to $82 million, with valuation gains of $78.3m versus $87.1 the year earlier.
"The lower fair value movement...reflects lower levels of retirement unit price increases across our portfolio in response to the flattening property market being seen in some areas of the country," said chief executive Julian Cook.
Revenue rose nearly 30 percent to $65.7m, while underlying profit, which excludes the movement in valuations, rose 27 percent to $45.2m.
The company made a record development margin of 33 percent, compared with 28 percent last year, but Mr Cook noted that gain was exceptional.
"The development margin result is pleasing but reflects the particular mix of retirement units settled in this period and our long run expectations for development margin are less than this."
He said Summerset's development pipeline continued to grow with the recent purchase of land in Napier.
"We delivered 165 new homes this half year and we are on target to meet our build rate of 450 homes for the year. This is despite continuing pressure from the Auckland construction market," he said, adding that resource consent for a proposed village in Auckland's St. Johns suburb has been turned down.
Mr Cook said the company was also challenged by labour shortages, even though the rate of staff attrition had dropped by 8 percent over the past year.
"We are seeing the shortages in care staff increase due to the changes introduced to immigration last year by the previous government. We believe it is important the current government recognises the importance of immigration alongside local training and development to ensure there are sufficient qualified and competent people in the aged care sector."
He said the company had also opened an office in Melbourne as it investigates the feasibility of expanding to Australia.