August 26, 2009
By Sarah McDonald and Haslinda Amin Aug. 26 (Bloomberg) — Westfield Group , the world’s largest owner of shopping centers, said property values in the U.S., U.K, Australia and New Zealand markets have reached their low and the company doesn’t need to sell shares to raise capital. “We think asset values have probably bottomed out, and should stabilize from here on,†Managing Director Peter Lowy said in a phone interview with Bloomberg Television. “When you look at our forward capital needs, we believe we can fund them easily from our own sources.†Westfield shares gained 4.7 percent to close at A$13.03 after the company announced today that first-half operating profit rose 12 percent to A$1.04 billion ($870 million). The Sydney-based shopping mall owner raised A$3.3 billion of equity and A$3 billion of debt since the start of the year as it bolsters a balance sheet dented by A$2.9 billion of asset writedowns in the first half. Westfield has 55 shopping malls in the U.S., where commercial property prices plummeted 27 percent in the year to June, according to Moody’s Investors Service. “The good thing you would say about the writedowns is that six months ago people were howling they weren’t being realistic enough,†said Matt Hoult , who helps manage $6 billion as head of Asia Pacific Property for Fortis Investments in Singapore, including Westfield. “One of the positives in getting more writedowns on the books is to put your assets in order, albeit that means your reported net profit result looks pretty awful.†Debt Extension Westfield’s first-half net loss was A$708 million in the six months ended June 30, compared with a profit of A$1.29 billion a year ago, the company said. This included the asset writedowns and a mark-to-market gain of A$932 million on financial instruments. The Australian Financial Review reported last month that Westfield may raise A$3 billion of new capital. Westfield said today banks agreed to extend the deadline on $1.4 billion of the company’s debt . The company won’t be selling shares, Lowy said. “We’re very comfortable with where the balance sheet is now,†he said. ‘Assets in Order’ Westfield said its gearing, or debt as a proportion of assets, stands at 34.8 percent and current available liquidity is A$7.5 billion, in today’s statement. The company will retain about A$500 million a year by cutting dividend payouts to a range of 70 percent to 75 percent of operating earnings and associated income hedging, from as much as 100 percent now, it said today. “Historically, one of the company’s most appealing features has been its impressive dividend yield compared to the broader market,†said Ben Potter , an analyst at IG Markets in Melbourne. Westfield earns more than one-third of its revenue from shopping malls in the U.S., where the economy has suffered the longest decline in the post-World War II era. Sales per square foot in the retailer’s U.S. malls in the period fell 6.2 percent from a year ago, it said. Retail sales at the company’s Australian centers posted the biggest gain in any of its markets, rising 5.1 percent. Australian consumer confidence jumped this month to the highest level in almost two years, adding to signs the nation’s economy has skirted the worst global slump since the Great Depression. Conditions Stabilizing “The Australian portfolio is performing above our expectations while conditions are stabilizing, albeit at lower levels, in the more challenging environments in the United States, the United Kingdom and New Zealand,†the company said. Home prices in 20 U.S. cities fell in June at a slower pace than forecast, signaling the real-estate crisis that triggered the worst recession since the 1930s is dissipating. “Prospects for a return to growth in the near term appear good,†U.S. Federal Reserve Chairman Ben S. Bernanke said last week at the Fed’s annual retreat in Jackson Hole, Wyoming, while warning that “critical challenges remain.†Westfield’s full-year operating earnings forecast is unchanged at a range of 94 Australian cents to 97 cents per share, it said today. The company will pay an interim dividend of 47 cents per share, down from 53.25 cents a year ago. — With additional reporting from Shani Raja in Sydney and Robert Fenner in Melbourne. Editors: Malcolm Scott , Garfield Reynolds , Iain Wilson To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net .
Read the full article →
August 26, 2009
By Andrew Cleary Aug. 26 (Bloomberg) — Heineken NV , the world’s third- largest brewer, reported a 20 percent gain in first-half profit that beat analysts’ estimates on cost savings and higher prices. Net income climbed to 489 million euros ($699 million) from 407 million euros a year earlier, the Amsterdam-based company said today. The average estimate compiled by Bloomberg was 425 million euros. Heineken rose as much as 9.3 percent in Amsterdam trading, the steepest intraday advance in 10 months. The maker of Amstel and the U.S.’s Heineken Premium Light reduced expenses by 50 million euros in the first half under its so-called Total Cost Management program, which has shed jobs in the U.S. and Europe and culled warehouses and trucks globally. Heineken also increased prices in markets from the U.S. to eastern Europe to offset shrinking consumption. “The results are very strong, especially with regard to cost savings,†Jan Meijer , an analyst at Theodoor Gilissen Bankiers NV in Amsterdam, said in an interview. “From an operational point of view they know what they have to do, and they delivered in difficult markets even though volumes were down.†Meijer has a “sell†rating on the shares. Heineken declined to say how much it will save in total from its latest austerity program, which will last for three years through 2011. Chief Financial Officer Rene Hooft Graafland said in June that Total Cost Management may have as much of an impact as its predecessor, Fit2Fight, which culled 450 million euros of expenses over three years. Increased Revenue Savings this year will equate to 120 million euros, the brewer said today, adding that it expects profit to rise by at least a “high single-digit†amount, excluding acquisitions, currency swings, one-time items and amortization. Heineken was up 2.45 euros, or 8.8 percent, to 30.31 euros as of 9:47 a.m. in Amsterdam. The stock has gained 38 percent this year, more than rival SABMiller Plc’s 23 percent climb. First-half revenue rose 11 percent to 7.18 billion euros on price increases and a 3.8 percent gain in beer volumes as a result of last year’s acquisition of former Scottish & Newcastle Plc units. Volumes declined 6.6 percent on an organic basis, which strips out the effects of the acquisition. Earnings before interest, taxes, amortization and one-time items climbed to 993 million euros from 925 million euros, more than the 928 million-euro estimate of the analysts. Ebita before one-time items rose 23 percent in Africa and the Middle East, and 21 percent in the Americas, where the amount of beer sold declined by 5.3 percent. ‘Price Positioning’ “It’s important to stick to our price positioning,†Hooft Graafland said in an interview. “But we have to do a better job in supporting the brand — to be honest there’s still a hell of a lot we have to do in the U.S.†The company has started an advertising campaign in English and Spanish to compete with its biggest U.S. rival, Grupo Modelo SAB de CV’s Corona, he added. The quantity of beer sold by Heineken’s central and eastern Europe unit fell 13 percent, hurt by weaker economies in Russia and Poland. In western Europe, a decline of 3.9 percent in organic beer volumes represented an improvement from the 9.8 percent drop in the first three months of the year. Carlsberg A/S this month said first-half organic beer volumes slipped 5 percent, due to falling demand in Russia. Anheuser-Busch InBev NV, the world’s largest brewer, limited its volume decline to 0.1 percent, owing to its dominant positions in the stronger domestic U.S. and Brazilian markets. Financial Expenses Heineken’s net financial expenses rose to 196 million euros from 133 million after it bought and broke up Scottish & Newcastle last year, making it the most reliant on western European sales of the big four brewers. “It is a profile we have always had, and that has differentiated us from competitors,†Hooft Graafland said of Heineken’s reliance on more mature markets. “It would be more logical that further expansion will be outside mature markets. There are not many opportunities left in Europe.†The CFO said any further expansion is a second priority to reducing borrowings. The brewer aims to cut its net debt-to- ebitda ratio to 2.5 from a current 3.1 “as quickly as possible,†he said, without saying how long it will take. Heineken said it generated 383 million euros of free cash flow in the first half, compared with a net outflow of 148 million euros in the same period last year. Buying back bank debt and Globe pub bonds at a discount led to a so-called book gain of 84 million euros in the half. To contact the reporter on this story: Andrew Cleary in London at acleary7@bloomberg.net .
Read the full article →
