SEGRO (SGRO) H2 2023 earnings summary

Executive summary

• Like-for-like net rental income rose 6.5% and adjusted EPS increased 5.5%; portfolio value declined 4.0% amid yield expansion.

• Rental growth, development opportunities and a strong balance sheet underpin plans for further profitable growth.

Financial highlights

• Adjusted profit before tax was £409m, up 6.0%; adjusted EPS was 32.7p, up 5.5%, for FY23.

• Net rental income rose 12.0% to £462m for the Group and 12.5% to £587m including joint ventures.

• Like-for-like net rental income increased 6.5%; completed developments added £42m, acquisitions £1m, while disposals reduced income by £6m.

• Dividend per share increased 5.7% to 27.8p; the FY23 portfolio valuation was £17.8bn, down 4.0%.

Outlook and guidance

• Estimated development capex for 2024 is ~£600m; anticipated capitalised interest is ~£60m, compared with £64m in 2023.

• Current and near-term development opportunities represent £71m potential rent and £342m capex; the land bank represents £372m potential rent and £3.5bn capex.

• Development outlook cites attractive 7–8% yields on cost, continuing rental growth, moderating construction costs and fewer speculative starts.

• Potential rent from passing rent, rent-free periods, vacancy, reversion and development totals £980m for 2024–2026, 53% above current passing rent.