EQS-News

Instone Group achieves upper end of earnings guidance; outlook for 2024 assumes continued solid profitability in a year of transition - Seite 2

Due to the challenging market situation, demand for new residential buildings in 2023 fell short of previous years. The negative effects of higher interest rates and the increased uncertainty of private and institutional investors remained clearly noticeable in 2023. However, there was an upturn in retail sales during the course of the year and particularly in the final quarter. Sales contracts with a volume of EUR 211.4 million (2022: EUR 292.1 million) were ultimately concluded in 2023 and therefore the forecast (over EUR 150 million) was more than comfortably achieved.

Instone Group maintains leading profitability in a difficult market environment

Adjusted revenues in 2023 amounted to EUR 616.0 million, almost at the previous year’s level (2022: EUR 621.0 million). The Instone Group continues to benefit from the high share of projects that have already been sold. Of the projects currently for sale, around EUR 2.9 billion of which are under construction, almost 90.0 percent had already been sold by year end, thus largely securing the expected cash flows from these projects in the coming years.

The adjusted gross profit margin in 2023 was 25.1 percent (2022: 25.3 percent), still on an attractive and industry-leading level, and with stabilising construction costs. The company benefits from fixed-price contracts and economies of scale in purchasing, the structural advantages of a high level of vertical integration and its many years of expertise in construction.

On the cost side, the measures introduced to increase efficiency will contribute to a noticeable reduction in platform costs. The target of reducing the recurring annualised platform costs to around EUR 70 million was achieved by the end of the fourth quarter of 2023.

The adjusted operating profit (adjusted EBIT) declined slightly to EUR 86.1 million (2022: EUR 88.6 million). Adjusted earnings after tax (EAT) amounted to EUR 48.2 million with a slightly higher tax rate (2022: EUR 50.0 million), almost at the same level as in the previous year.

Retail sales with a noticeable upturn in the final quarter

In 2023, the Instone Group sold properties worth EUR 211.4 million, which is below the previous year’s level (2022: EUR 292.1 million). Overall, this reflects the weakness in demand resulting from the rise in interest rates and the general uncertainty of both private and institutional investors. Conversely, the volume of sales contracts achieved in the final quarter of 2023 was around EUR 120 million, constituting the largest sales volume in a quarter since the beginning of 2022. This is due in part to an institutional sale and contractually agreed purchase price indexation in the Westville project. Overall, however, the institutional market is still marked by a pronounced reluctance to buy. In retail sales, on the other hand, the moderate recovery trend continued in the fourth quarter. This was also backed up by a positive response to the sales starts for two new projects.