Citycon Oyj's Interim Report for 1 January - 30 June 2010
(Thomson Reuters ONE) -
Citycon Oyj Stock Exchange Release 14 July 2010 at 09.00 hrs
Summary of the Second Quarter of 2010 Compared with the Previous Quarter
- Turnover decreased to EUR 48.6 million (Q1/2010: EUR 49.5 million), due mainly
to several (re)development projects initiated in Finland causing temporary
reduction in turnover.
- Net rental income increased by 4.0 per cent to EUR 31.8 million (EUR 30.6
million). This increase was due to lower property operating expenses reflecting
common seasonal variations.
- Earnings per share increased to EUR 0.13 (EUR 0.06) due mainly to fair value
changes.
- Direct result per share (diluted) was EUR 0.05 (EUR 0.05).
- The fair value change of investment properties was EUR 22.9 million (EUR 0.8
million), and the fair value of investment properties totalled EUR 2,229.5
million (EUR 2,193.5 million).
- The average net yield requirement for investment properties remained at the
previous quarter's level and was 6.6 per cent (6.6%) at the end of the period,
according to an external appraiser.
- Net financial expenses increased to EUR 14.4 million (EUR 13.1 million) due
mainly to higher interest expenses.
- On the basis of Citycon's loan agreement covenants, its interest cover ratio
was 2.2x (2.3x) and equity ratio 37.1 per cent (39.2%).
- Citycon conducted repurchases of its convertible bonds due 2013 for EUR 3.4
million.
- During the period, the company signed three loan agreements, each worth EUR
50 million and maturing in five years.
- The construction of the Martinlaakso shopping centre was initiated during the
period. The apartments built within the Liljeholmstorget shopping centre were
sold, as per a previous agreement, for a price of SEK 176 million (approx. EUR
18.5 million).
- Chaim Katzman was elected to the Board of Directors by the Extraordinary
General Meeting of 17 May 2010 and was appointed Board Chairman in June.
- The company revises its guidance regarding direct result and direct operating
profit (from 3-6 per cent to 1-4 per cent). The change is due mainly to slower
stabilisation and development of certain projects.
Summary of January-June 2010 Compared with the Corresponding Period of 2009
- Turnover grew by 7.3 per cent to EUR 98.1 million (Q1-2/2009: EUR 91.5
million). This increase was due to the growth in gross leasable area and active
development of the retail properties. Turnover growth was reduced by a slightly
higher vacancy rate and the start-up of new (re)development projects.
- Profit/loss before taxes was EUR 52.0 million (EUR -28.7 million), including a
EUR 23.7 million (EUR -57.6 million) change in the fair value of investment
properties.
- Net rental income increased by 1.8 per cent to EUR 62.5 million (EUR 61.3
million). If the impact of the strengthened Swedish krona is excluded, net
rental income decreased by -0.1 per cent.
- Net rental income from like-for-like properties decreased by 1.0 per cent, due
mainly to higher property operating expenses than in the corresponding period.
These higher operating expenses were caused mainly by exceptionally severe
winter conditions. Additionally, prevailing low inflation or deflation resulted
in very low indexation-based rental increases.
- The company's direct result decreased to EUR 21.5 million (EUR 24.2 million).
- Direct result per share (diluted) was EUR 0.10 (EUR 0.11).
- Earnings per share were EUR 0.19 (EUR -0.11). Changes in the fair value of
investment properties have a substantial impact on earnings per share.
- The occupancy rate was 94.6 per cent (94.8%). The decrease in the occupancy
rate resulted from the start-up of new (re)development projects and a slightly
higher vacancy rate.
- Net cash from operating activities per share decreased to EUR 0.05 (EUR 0.19)
due mainly to extraordinary items and timing differences.
- The equity ratio was 33.8 per cent (36.2%). This decrease resulted mainly from
paid up dividends and equity return and higher debt due to investments.
- The company's financial position remained good during the period. Total
liquidity at the end of the reporting period was EUR 246.2 million, including
unutilised committed debt facilities amounting to EUR 221.2 million and
EUR 25.0 million in cash.
CEO Petri Olkinuora's Comments on the First Half of 2010:
"Citycon's net rental income continued to grow in the second quarter. Growth was
generated by both active retail property management and the completed
development projects in Stockholm and Tallinn. On the other hand, growth was
temporarily slowed down by simultaneous, ongoing (re)development projects,
specifically in Finland. The stabilisation of the projects completed last year
was slower than expected.
Earlier this year, Citycon launched four new (re)development projects. These
projects will further enhance the competitiveness and attractiveness of
Citycon's shopping centres. The company has accelerated the execution of its
(re)development pipeline, with seven active major construction sites and several
more being planned, enjoying softening of the construction cost. Naturally
construction projects temporarily lower the rental income of properties, but
once the projects are completed the centres will be more competitive in the
rental market and more attractive to customers.
The financial position of the company is stable. During the reporting period,
Citycon continued repurchasing its convertible bonds as well as selling non-core
properties including the sales of the apartments in Liljeholmstorget and
Jakobsbergs Centrum in Greater Stockholm area. The total value of all the
divestments was about EUR 50 million. The property sales are in compliance with
the company's strategy and release capital for core business.
During the period, the company signed three unsecured EUR 50 million five-year
loan agreements on very competitive terms. At the period end, available
liquidity totalled EUR 246.2 million. This is sufficient to fund ongoing
development projects as well as maturing loans for at least the next 12 months."
Outlook
Citycon continues to focus on increasing its net cash from operating activities
and direct operating profit. In order to implement this strategy, the company
will pursue value-added activities while cautiously monitoring the market for
potential acquisitions.
Due to the uncertainty on the markets, the initiation of planned projects will
be carefully evaluated against strict pre-leasing criteria. Citycon intends to
continue the divestment of its non-core properties to improve the property
portfolio and strengthen the company's financial position. The company is also
considering alternative property financing sources.
In 2010, Citycon's turnover is expected to grow by approximately 3-7 per cent
and direct operating profit by approximately 1-4 per cent compared with the
previous year, based on the existing portfolio. The company expects its direct
result to be moderately lower than in the previous year. The estimate is based
on completed (re)development projects and the prevailing low inflation level. In
addition, properties taken offline for planned (re)development projects will
reduce net rental income during the year.
The change in outlook regarding direct result and direct operating profit (from
3-6 per cent to 1-4 per cent) is due mainly to slower stabilisation and
development of certain projects.
Helsinki, 13 July 2010
Citycon Oyj
Board of Directors
The entire report with tables in pdf-format can be downloaded from the link
below.
Financial Reports in 2010
Citycon will issue one more interim report during the financial year 2010. The
interim report 1-9/2010 will be published on Wednesday 13 October 2010, at
approximately 9:00 a.m.
For more investor information, please visit the corporate website at
www.citycon.com.
For further information, please contact:
Petri Olkinuora, CEO
Tel +358 20 766 4401 or +358 400 333 256
petri.olkinuora(at)citycon.fi
Eero Sihvonen, Executive Vice President and CFO
Tel +358 20 766 4459 or +358 50 557 9137
eero.sihvonen(at)citycon.fi
Distribution:
NASDAQ OMX Helsinki
Major media
www.citycon.com
[HUG#1431365]
Citycon Oyj Interim Report 1 January-30 June 2010: http://hugin.info/3030/R/1431365/377846.pdf
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Source: Citycon Oyj via Thomson Reuters ONE
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Datum: 14.07.2010 - 08:00 Uhr
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