UPDATE 2.15pm Westfield has lifted its first half profit by nearly a third and says it will boost investment in its better-performing Australian shopping centres to drive earnings further.
The global shopping centre giant today reported a net profit of $800.1 million for the six months to June 30, a 31 per cent improvement on the $608.7 million in the previous corresponding period.
But its half year revenue of $1.213 billion was down 10.7 per cent after Westfield sold off some assets.
Co-chief executive Peter Lowy said while retail conditions were challenging, Westfield would focus on investing in its better-performing Australian shopping centres.
“Whilst we are in a subdued environment we remain very focused on increasing and investing in, particularly, our better assets because they will remain strong and have proven resilient through major cycles,” he said.
He said there was no obvious answer on how to improve consumer confidence in Australia, considering the economic environment was already strong.
“There clearly needs to be a spark, I don’t know what that spark is, to kick that (consumer confidence) along,” he said.
“The fundamentals of the country remain very strong - GDP growth, low inflation, very good employment figures - on any macro scale the country is very strong but there does need to be a spark at the consumer level.”
Globally Westfield said its strategy was to invest in world-class retail centres in major global cities.
Co-chief executive Steven Lowy said a prime example of this was Westfield’s Stratford City shopping centre at the gateway to the London Olympic site.
“In total, approximately 5.5 million visits were made to our centre in just over two weeks, giving the group an unprecedented exposure to a global audience,” Mr Lowy said.
Westfield currently has about $1.5 billion worth of projects under construction, including its shopping centre at New York’s World Trade Center, and plans to begin work on projects worth $500 million in the second half of its financial year.
“I think it (the World Trade Center) is probably one of the best sites in the US if not one of the best sites in the world so we will do a spectacular job there,” Mr Lowy said.
Cameron Securities client adviser Henry Jennings said Westfield had performed slightly better than expected, especially considering the tough retail climate.
“We know that things haven’t been particularly rosy all over the world but you look at their occupancy rates and their rental increases and it’s all quite positive,” he said.
“They seem to be surviving a lot better than most other people do in that sector.”
Westfield declared an interim distribution of 24.75 cents a security, an increase of 2.3 per cent on the previous corresponding period.
It also reconfirmed an earlier forecast of funds from operations of 65 cents a security for the full year and a distribution of 49.5 cents a security.
Westfield securities closed five cents higher at $9.63.