Goodman Group (ASX:GMG) share price falls after FY21 results

The Goodman Group share price is falling sharply, despite exceeding FY21 forecasts

| More on:
A man wearing a suit and sitting at his desk in front of his computer puts his hand to his forehead in frustration over the delayed Afrterpay takeover

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Goodman Group (ASX: GMG) share price has sold off sharply this morning after the company released its full-year FY21 results.

Shortly after opening, shares in the industrial real estate investment trust (REIT) tumbled 4.97% to $22.01. They have since regained some ground and at the time of writing are down 3.5% to $22.35.

Goodman share price slumps despite exceeding guidance

  • Operating profit of $1.22 billion, up 15% on FY20
  • Operating earnings per security (EPS) of 65.5 cents, up 14.1%
  • Statutory profit of $2.3 billion
  • Distribution of 30.0 cents per share
  • Total assets under management (AUM) of $57.9 billion, up 12%
  • Portfolio occupancy rate of 98.1% and like-for-like net property income growth of 3.2%

What happened in FY21 for Goodman Group?

In FY21, the Goodman Group share price has been supported by the company's focus on high barrier to entry markets where land is scarce and use is intensifying.

The company was pleased to highlight that customer demand for space in its locations continues to increase across a range of industries.

"The prolonged impacts of the global pandemic continue to accelerate consumers' propensity to shift to online shopping. Logistics and warehousing has provided critical infrastructure to enable distribution of essential goods to time-sensitive consumers through this period."

As a result, the company cited increasing utilisation of its facilities with an occupancy rate of 98.1% at a weighted average lease expire (WALE) of 4.5 years.

This theme has carried through to the company's development pipeline, with $10.6 billion worth of work in progress.

Encouragingly, the company said there were high levels of pre-commitment at 70% with a 14-year WALE. Additionally, it said projects completed in FY21 were 96% leased.

More broadly speaking, Goodman Group said that "around the world … continues to undertake long-term value-enhancing opportunities by targeting higher and better use through re-zoning or increased floor space ratios with multi-level warehousing facilities".

Goodman Group's FY21 results exceeded its latest forecast of $1.2 billion in operating profit or an earnings per share (EPS) growth of 12%.

Despite coming out ahead of its forecasts, the Goodman share price has tanked 3.5% to $23.35.

What did management say?

Goodman Group chief executive officer Greg Goodman was pleased with the company's performance.

Goodman's adaptable and flexible approach has enabled our people to continue to perform at a high standard and deliver a very strong result in the current environment, with health and well-being remaining a critical priority.

Mr Goodman also highlighted the tailwinds behind the company's focus on high-quality real estate.

Long-term structural trends are well established and are resulting in higher utilisation of space and customer demand. This is providing greater visibility around future requirements for space, and accordingly we have increased WIP further to $10.6 billion at June 2021. The development and valuation growth is flowing through to our partnership platform, where total AUM has increased 12% to $57.9 billion in FY21. With strong income and capital growth, our partnerships have delivered average returns of 17.7%.

What's next for Goodman Group

Looking ahead, Goodman Group said it expects to deliver FY22 operating EPS of 72.2 cents. That would be a 10% increase on FY21 figures.

The company's forecast FY22 distribution is expected to remain steady at 30 cents per share.

Despite the sharp pullback on Thursday, the Goodman share price has rallied more than 16% year-to-date. It is also up 21% in the past 12 months.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

Up 74% in 2024, why is this ASX 200 stock rallying today?

Recurring revenues continue to grow.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

Guess which ASX All Ords share is soaring on 21% FY 2024 growth

Investors are piling into the ASX All Ords share today. Let’s find out why.

Read more »

Girl sliding down on snow with arms spread out.
Earnings Results

Elders shares on ice for a $475 million acquisition after profits plunge 55%

What on earth is going on with Elders shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

Business people discussing project on digital tablet.
Earnings Results

2 ASX All Ords shares surging over 10% on strong results

Investors are buying these shares in response to strong results this morning.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Industrials Shares

This $23 billion ASX 200 stock is surging 6% while the market sinks. Here's why

This ASX 200 stock is shrugging off the wider market sell down today and racing higher. But why?

Read more »