Trade Me predicts drop in property listings revenue as real estate market slows
By Paul McBeth
Nov. 9 (BusinessDesk) - Trade Me has pared back its expectations for how much revenue property listings will deliver in the current financial year as the country's real estate market keeps slowing but still anticipates annual earnings growth.
The Wellington-based online auction company's classifieds revenue rose 13 percent in the four months ended Oct. 31 from the same period a year earlier, driven by a 29 percent gain in motor listings and a 20 percent increase in job ads. Real estate listings revenue was up just 2 percent, and chief executive Jon Macdonald told shareholders at today's annual meeting in Wellington that slowing activity in the broader property market would show up in the annual revenue result.
However, he kept Trade Me's forecast to deliver year-on-year gains in earnings before interest, tax, depreciation and amortisation and net profit, which were $154 million and $93 million respectively in 2017.
"While we have seen further improvement in our market share and some renewed activity after the election, we now believe that the market will remain at low levels for at least the remainder of this financial year given the changes indicated to immigration and foreign ownership of real estate," Macdonald said in speech notes published on the NZX. "Despite the challenge, we retain our profit outlook. In doing so, we intend to deliver another set of record numbers for both revenue and profit for the company."
Trade Me went through a period of tepid earnings growth when it reinvested funds back into the business, which Macdonald has previously said sets it up for medium and long-term success.
The company today said revenue was tracking 7 percent ahead after four months of trading from a year earlier, while expenses were up 10 percent. Ebitda was 5 percent higher after the first four months of the year.
The shares slipped 0.2 percent to $4.32, having dropped 14 percent so far this year.