Leopalace21 (8848) Q2 2024 earnings summary

Executive summary

• H1 net sales rose 2.0% to ¥216.165bn; operating profit increased 17.5% to ¥17.426bn, a post-global-financial-crisis high and 19.4% above plan.

• Recurring profit rose 27.6% to ¥16.729bn and EBITDA increased 11.4% to ¥19.272bn.

• Net income declined 10.6% to ¥10.596bn, mainly due to higher income taxes despite stronger operating results.

Financial highlights

• Gross profit increased 12.1% to ¥40.1bn; gross margin improved to 18.5% from 16.9% a year earlier.

• Operating margin rose to 8.1% from 7.0% year-over-year.

• SG&A increased ¥1.7bn year-over-year to ¥22.7bn, mainly due to higher personnel costs; cost of sales was broadly flat at ¥176.1bn.

• Total assets rose 1.5% from March 31 to ¥208.137bn; net assets increased 17.1% to ¥83.939bn.

• Net income per share was ¥33.35.

Outlook and guidance

• FY2024 forecast unchanged: net sales ¥428.6bn, operating profit ¥26.6bn, recurring profit ¥24.9bn, net income ¥14.5bn and EPS ¥45.64.

• FY2024 occupancy targets are 87.0% on average and 90.0% at year-end; planned rent growth is 0.2% for new contracts and 2.5% for all occupied units.

• Annual dividend forecast is ¥10 per share, comprising ¥5 interim and ¥5 year-end.

• Target to eliminate obvious construction defects by end-2024; plans include a framework to resume development business and a brand strategy.