Specialist residential property developer Balwin’s first-half profit more than halved as the residential property sector remained under pressure due to high interest rates.
Profit for the six months to end-August fell 57% to R76.9m as revenue fell 28% to R852.7m, it said in a statement on Monday.
The decrease in group revenue was largely attributable to the decline in apartment sales where 640 apartments were recognised in revenue, down 23% on the 834 apartments for the year-earlier period.
The group also experienced moderate sales price pressure in the period where sales incentives continued to be utilised to support demand, most notably in the Gauteng node.
Headline earnings per share (HEPS) fell 57% to 16.26c. No interim dividend was declared.
Cash management and prudent capital allocation remained a priority for the group, it said.
The group closed the period with a cash balance of R242.8m. The cash and cash equivalents on hand exceed the minimum funding covenants and thresholds set by the board. The group’s loan-to-value ratio reduced marginally to 40.2% from February 2024’s 40.5%.
Balwin said that while market sentiment traded positively after the announcement of the government of national unity (GNU) and the improvement in macroeconomic conditions in the period, this encouraging trend did not flow materially into the residential property market due to the over-arching high borrowing costs for prospective customers.
The recent 25 basis point (bp) reduction in the prime interest rate is the first positive step for an expected recovery in the residential property market. The reduction was, however, after the reporting period, so had no effect on the results presented, it said.
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