Zug Estates (ZUGN) H2 2023 earnings summary

Executive summary

• FY2023 operating performance improved: operating revenue rose 5.8% YoY, while adjusted net income was broadly stable at CHF 33.9m; reported net income fell on negative property revaluations.

• Property leasing activity was strong across segments; the S43/45 project moved to realization, while the Metalli development remained uncertain pending planning clarifications.

Financial highlights

• Operating revenue was CHF 84.8m, up 5.8% YoY; property revenue rose 5.5% to CHF 65.7m, with like-for-like growth of 1.5%.

• Operating expenses increased to CHF 32.6m from CHF 30.4m; EBIT declined 28.9% to CHF 37.6m.

• Reported net income was CHF 24.2m, down 39.2% YoY, including a net CHF 11.0m revaluation loss versus a CHF 6.8m gain in 2022.

• Adjusted net income, excluding revaluations and special effects, was CHF 33.9m, up 0.2% YoY.

Outlook and guidance

• FY2024 property outlook: vacancy rate expected to fall markedly to ~1%, with higher rental income and improved operating result from leasing successes and index/reference-rate rent adjustments.

• FY2024 financing costs are expected to rise slightly; hotel and gastronomy revenue is expected to increase, while GOP margin is expected to ease slightly as lower-margin gastronomy grows in the mix.

• FY2024 adjusted net income, excluding revaluations and special effects, is expected to exceed CHF 35.0m.

• Dividend policy targets positive dividend progression while maintaining long-term financial soundness; distributions should not exceed 90% of operating profit.