GMG Goodman Group

MELBOURNE (Dow Jones--Goodman Group (GMG.AU), Australia's largest industrial property trust, posted a large headline loss on property writedowns Friday but met market expectations with its underlying profit and made some encouraging outlook statements.

The Sydney-based company posted a net loss of A$1.12 billion for the year ended June 30, compared to a net profit of A$250.7 million a year earlier.

The headline figure included a A$1.16 billion writedown on investment properties for the year and a A$280 million charge on primary derivative market movements.

Its operating profit, excluding property revaluations, mark-to-market of derivatives and other non-cash items, was A$408.1 million down from A$567.1 million a year earlier, in line with recent guidance and market expectations.

Like many of Australia's listed property trusts, Goodman has recently undertaken a major capital raising to shore up its balance sheet in the face of falling property values, and Chief Executive Greg Goodman said the group was now well placed with some early signs of recovery in the industrial property market emerging.

"We believe that property fundamentals are holding up relatively well and early signs are emerging that market conditions are beginning to stabilize," he said.

"The group has retained its global business platform, which will be a significant benefit as markets show further signs of improvement."

JPMorgan analyst Richard Jones agreed that the A$923 million equity raising carried out earlier this month had shored up the company's balance sheet and would allow it to benefit as asset values recovered.

"They are not constrained by a covenant process that is going to see them act in ways that are going to destroy value in the funds," he said.

"They are in control of their own destiny where, maybe they weren't completely in control prior to the capital raising and refinancing."

Jones said the result was directly in line with expectations and contained few surprises.

Goodman told analysts the group may have sites that are of interest to Woolworths Ltd. and Lowe's Cos. as they build a chain of large scale hardware stores.

Woolworths and Lowe's this week announced they were joining together to challenge the dominant Bunnings chain of Wesfarmers Ltd. with the launch of big-box home improvement stores across Australia in 2011.

"We are aware of a number of opportunities where they will be looking for sites around the country," Goodman said.

"We don't see ourselves getting in and necessarily developing the product, but we have got a number of sites which may be interesting around the country."

Goodman's revenue and other income for the year fell to A$915.5 million from A$1.37 billion in the prior year and Goodman posted no final distribution compared to 8.5 cents a share a year earlier.

The group gave guidance for an estimated operating profit of A$310 million in the current financial year and a distribution per share of 3.4 cents.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com

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