Magnolia Bostad (MAG) Q4 2019 earnings summary

Executive summary

• 2019 operating profit was SEK 380m, including SEK 348m of fair-value gains on managed properties; profit after tax was SEK 171m.

• Production starts rose to 2,678 units from 1,939; the year-end portfolio comprised 18,037 estimated building rights and 9,284 units in production.

• Growth in self-management properties and joint ventures (JVs) expanded the model, while lower project sales reduced net sales.

Financial highlights

• Net sales were SEK 751m vs SEK 1,054m; property-sale revenue was SEK 486m vs SEK 789m, reflecting 533 units recognized vs 1,314.

• Gross profit was SEK 44m vs SEK 147m; operating profit was SEK 380m vs SEK 164m, including SEK 348m of investment-property value changes vs SEK 67m.

• Profit before tax was SEK 208m vs SEK 22m; net profit was SEK 171m vs SEK 7m, with deferred tax expense of SEK 37m vs SEK 15m.

• Operating costs included SEK 89m of central administration vs SEK 64m; net financial items were SEK -172m vs SEK -142m.

Outlook and guidance

• Annual production-start capacity target: 3,000 residential units, three to five community-service facilities and one to two hotels.

• The strategy prioritizes rental housing, larger development projects and selective self-management; production is to start once demand is secured.

• Management cited persistent Swedish housing needs and confidence in the business, but said the short- and long-term effects of Covid-19 were difficult to assess.

• No dividend was proposed for FY2019; the stated dividend policy allows up to 50% of profit after tax subject to financial position, loan terms and market conditions.