Metlifecare expects to increase FY profit about 13% as it expands in high-value areas

Metlifecare, New Zealand's second-largest listed retirement village operator, signalled full-year underlying profit may rise about 13 percent as it expands in higher value markets.

The Auckland-based company posted a 70 percent gain in first-half underlying profit, which removes non-cash items including unrealised valuation gains, to $26 million, and said profit in the second half of its financial year is expected to be in line with that. That equates to full-year underlying profit of about $52 million, up from $46 million last year.

Metlifecare, which counts the New Zealand Superannuation Fund and Infratil as cornerstone investors, benefited in the first half from increased sales as it sold more units in Auckland and other higher value villages. Its development margin, which measures the margin obtained selling an occupation right after development, jumped to 20.8 percent after it settled the sale of 29 new units, compared with a margin of 14 percent on the sale of 19 units in the year earlier period. Sales of new units more than doubled to $16.1 million, from $7.8 million.

"Metlifecare is beginning to enjoy the material benefits of an experienced in-house development team and is looking at other opportunities to build its in-house capabilities and reduce costs as it advances the company's development pipeline," said chief executive Alan Edwards. "Growing Metlifecare profitably remains an important part of our focus for this year."

The company, which boosted its size by merging with Vision Senior Living and private Life Care Holdings in 2013, has 198 units and beds under construction, as it nears its sustainable build rate to at least 200 a year by the 2015 year.

"Identifying and assessing suitable land sites particularly in the upper North Island, remains a priority for the company," Edwards said. "The property market within our targeted geographical regions continues to perform well and we are taking a carefully considered approach to land acquisition in these areas."

In the first half, sales of existing units increased 18 percent to $72.9 million as the volume rose 17 percent to a record 202. Its occupancy rate improved to 96 percent from 95 percent a year earlier.

The value of Metlifecare's assets increased 7.3 percent to $2.1 billion. Its development pipeline increased 30 percent to 1,459 units and beds.

First-half net profit increased to $39.7 million, or 18.78 cents per share, from $26.8 million, or 12.76 cents, a year earlier. Total income rose 8.4 percent to $51 million as expenses fell 1.3 percent to $41.2 million.

The company booked a $32.3 million gain in the value of its properties in the period, up from a $25.5 million gain the year earlier.

Metlifecare will pay a 1.5 cents a share dividend on April 17, up from 1.25 cents a year earlier.

The company's shares last traded at $4.78, and have increased 1.7 percent so far this year.