UBM with record dividend of €2.00 per share after significant earnings growth in 2017
- Dividend of EUR 2.00 (up 25%)
- Net profit of EUR 37m and earnings per share of EUR 4.88
- Net debt reduced and equity ratio at all-time high
- Outlook for 2018: Record year expected
- Full capacity utilisation and good earnings visibility through forward sales
- Total Output, earnings and equity in 2018 to surpass record year 2015
- Managing Board re-appointed for five-year term
On the date of its 145-year anniversary as a listed company, UBM presents the proposal of a record dividend of EUR 2.00 per share (up 25%, with a dividend yield of about 5%) and thus underlines the earnings growth achieved in 2017 (net profit of EUR 37.0m). “The dividend is based on continuity and also reflects our future earnings strength”, says Thomas G. Winkler, UBM’s Chief Executive Officer. The earnings trend is predicted to be very positive: For 2018, new record levels are expected in Total Output, earnings before taxes, earnings per share and equity. UBM is maintaining its strategic direction of reducing standing assets and systematically continuing the Group’s conversion into a pure developer of real estate. Under its new “Pure Play Program”, standing assets worth EUR170m are to be sold in the next 18 months in order to free up funds for use in the higher-margin development business and for the further reduction of net debt. The Supervisory Board believes the Managing Board’s strategic focus is appropriate, and has re-appointed all three Management Board Directors ahead of schedule, to 2023.
Significant growth in Total Output and earnings
In the 2017 financial year, UBM boosted its Total Output by 33.6% to EUR 744.7m. The primary reason for the increase was the successful implementation of the accelerated “Fast Track 17” sales program. On the development side, the most notable properties are the two hotels and an office and micro-living project in Quartier Belvedere Central (QBC) in Vienna, the Kotlarska office project in Krakow and the Hyatt Regency luxury hotel in Amsterdam. Net profit in 2017 was EUR 37.0m, up 25.9% from the prior year. Net profit after non-controlling interests, at EUR 36.5m, was even significantly higher than in the record year 2015 (EUR 33.8m). In the 2017 financial year, UBM delivered earnings per share of EUR 4.88, which was substantially above the prior year’s EUR 3.90 per share.
Net debt further reduced
The net debt position of EUR 477.9m not only improved by 30.9% from the level of EUR 691.2m at 31 December 2016 but also significantly overachieved the guidance of EUR 520m that was even reduced downward at the time of the third-quarter reporting. This debt reduction was made possible by the strong sales performance in the full year 2017, which brought cash proceeds of almost EUR 600m. Equity at 31 December 2017 was EUR 355.4m. With total assets easing to EUR 1,130.9m (2016: EUR 1,233.8m), the equity ratio increased visibly to 31.4% (2016: 27.7%). The successful issue of a EUR 100m hybrid bond at the end of February 2018 is not yet reflected in the balance sheet results at 31 December 2017. After the repayment of EUR 50m of mezzanine capital to PORR AG on 3 April 2018, the net effect in equity is EUR 50m.
Despite numerous completions in 2017, UBM has a more than full project pipeline of EUR 1.8 bn (2018-2021). In order to mitigate risks, UBM’s aim is to achieve deal security early through forward sales or forward funding. About one-half of the pipeline of EUR 1.6 bn to 2020 is already sold forward, and for the projects in 2018 this share is even above 75%, which translates into high visibility in the earnings trajectory. For example, in 2017 the new corporate headquarters of Zalando in Germany, which will be completed in autumn 2018, was sold forward for EUR 196m. This asset represents UBM’s largest single project. Other major forward deals in 2018 include the Leuchtenbergring project in Munich at EUR 190m, and the two residential and microliving projects in QBC for a total amount of EUR 60m.
Outlook for 2018
In the European real estate markets, property investment is expected to remain strong in 2018. UBM’s three core geographic markets Germany, Austria and Poland and its three asset classes Hotel, Office and Residential should all benefit from this positive market environment. On this basis, UBM is optimistic that both Total Output and earnings for the 2018 financial year will surpass the record levels of 2015. Against this backdrop the Management Board expects Total Output in excess of EUR 750m and earnings before tax of more than EUR 50m. Earnings per share in 2018 should thus top the five-euro mark. Equity at the end of 2018 is projected to exceed EUR 400m.
Key performance indicators:
|Key earnings figures||2017||Change**||2016||2015|
|Key asset & financial figures||2017||Change**||2016||2015|
|Key share data and staff||2017||Change**||2016||2015|
|Number of shares
|Earnings per share (in EUR)||4.88||+25.3%||3.90||4.90|
(in EURm as of 31 Dec)
|Dividend per share (in EUR)||2.00***||+25.0%||1.60||1.60|
* Total Output represents the revenue of fully consolidated companies and those accounted for under the equity method, as well as sales proceeds from share deals based on the equity interest held by UBM.
** The figures are rounded using the compensated summation method. Changes are calculated using the exact values.
*** Proposal to the Annual General Meeting on 29 May 2018
**** Breakdown: Development 309 and Hotel 439 (31.12.2017); Development 309 and Hotel 407 (31.12.2016)
UBM Development is the leading hotel developer in Europe. Its strategic focus is on the three clearly defined asset classes Hotel, Office and Residential and the three core markets Germany, Austria and Poland. With 145 years of experience, UBM focuses on its core competency, the development of real estate. The Group acts as a one-stop provider for the entire value chain from initial planning all the way to marketing the property. UBM’s shares are listed in the Prime Market segment of the Vienna Stock Exchange.