Kojamo plc Stock Exchange Release, 15 August 2024 at 8.00 a.m. EEST
Kojamo plc Half-Year Financial Report 1 January–30 June 2024
Total revenue and net rental income increased, renting was impacted by the continued abundant supply on the market
This is a summary of the January–June Half-Year Financial Report, which is in its entirety attached to this release and can be downloaded from the company’s website at www.kojamo.fi/investors.
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Half-Year Financial Report have not been audited.
Summary of April–June 2024
- Total revenue increased by 3.1 per cent to EUR 112.3 (108.9) million
- Net rental income increased by 3.9 per cent totalling EUR 82.1 (79.0) million. Net rental income represented 73.1 (72.6) per cent of total revenue
- Result before taxes was EUR -104.3 (71.7) million. The result includes EUR -149.9 (14.0) million net result on the valuation of investment properties at fair value. Earnings per share was EUR -0.34 (0.23)
- Funds From Operations (FFO) decreased by 17.4 per cent and amounted to EUR 42.7 (51.7) million
- Gross investments totalled EUR 10.9 (61.3) million, representing 9.7 (56.3) per cent of total revenue
Summary of January–June 2024
- Total revenue increased by 3.9 per cent to EUR 225.6 (217.1) million.
- Net rental income increased by 3.0 per cent to EUR 142.7 (138.5) million. Net rental income was 63.3 (63.8) per cent of total revenue.
- Result before taxes was EUR -65.0 (95.7) million. The result includes EUR -138.8 (5.1) million net result on the valuation of investment properties at fair value and EUR -0.8 (-0.1) million in profit/loss from the sale of investment properties. Earnings per share was EUR -0.21 (0.31).
- Funds From Operations (FFO) decreased by 15.3 per cent to EUR 68.2 (80.5) million.
- The fair value of investment properties was EUR 7.9 (8.3) billion at the end of the review period, including EUR 1.3 (0.0) million in Investment properties held for sale.
- The financial occupancy rate was 91.7 (92.2) per cent for the review period.
- Gross investments amounted to EUR 19.3 (116.3) million, representing 8.6 (53.5) per cent of total revenue.
- Equity per share was EUR 14.50 (15.46), and return on equity was -2.9 (4.0) per cent. Return on investment was -0.2 (3.6) per cent.
- EPRA NRV (Net Reinstatement Value) per share fell by 6.9 per cent to EUR 18.16 (19.50).
- There were 0 (1,152) Lumo apartments under construction at the end of the review period.
Kojamo owned 40,973 (39,819) rental apartments at the end of the review period. Since June of last year, Kojamo has completed 1,152 (1,216) apartments, sold 0 (73) and demolished or otherwise altered 2 (9) apartments.
Key figures
| 4–6/2024 | 4–6/2023 | Change % | 1–6/2024 | 1–6/2023 | Change % | 2023 | |
| Total revenue, M€ | 112.3 | 108.9 | 3.1 | 225.6 | 217.1 | 3.9 | 442.2 |
| Net rental income, M€ * | 82.1 | 79.0 | 3.9 | 142.7 | 138.5 | 3.0 | 297.2 |
| Net rental income margin, % * | 73.1 | 72.6 | 63.3 | 63.8 | 67.2 | ||
| Profit/loss before taxes, M€ * | -104.3 | 71.7 | -245.5 | -65.0 | 95.7 | -167.9 | -112.3 |
| EBITDA, M€ * | -78.0 | 82.0 | -195.1 | -15.9 | 122.9 | -112.9 | -39.9 |
| EBITDA margin, % * | -69.4 | 75.3 | -7.1 | 56.6 | -9.0 | ||
| Adjusted EBITDA, M€ * | 71.9 | 68.0 | 5.7 | 123.8 | 118.0 | 4.9 | 255.1 |
| Adjusted EBITDA margin, % * | 64.0 | 62.5 | 54.9 | 54.3 | 57.7 | ||
| Funds From Operations (FFO), M€ * | 42.7 | 51.7 | -17.4 | 68.2 | 80.5 | -15.3 | 167.2 |
| FFO margin, % * | 38.0 | 47.5 | 30.2 | 37.1 | 37.8 | ||
| FFO excluding non-recurring costs, M€ * | 42.7 | 51.7 | -17.4 | 68.2 | 80.5 | -15.3 | 167.2 |
| Investment properties, M€ ¹⁾ | 7,922.6 | 8,268.1 | -4.2 | 8,038.8 | |||
| Financial occupancy rate, % | 91.7 | 92.2 | 93.0 | ||||
| Interest-bearing liabilities, M€ * | 3,861.4 | 3,658.8 | 5.5 | 3,600.4 | |||
| Return on equity (ROE), % * | -2.9 | 4.0 | -2.4 | ||||
| Return on investment (ROI), % * | -0.2 | 3.6 | -0.4 | ||||
| Equity ratio, % * | 43.0 | 45.3 | 44.5 | ||||
| Loan to Value (LTV), % *²⁾ | 45.0 | 43.8 | 44.6 | ||||
| EPRA Net Reinstatement Value (NRV), M€ | 4,487.0 | 4,819.9 | -6.9 | 4,558.8 | |||
| Gross investments, M€ * | 10.9 | 61.3 | -82.2 | 19.3 | 116.3 | -83.4 | 190.7 |
| Number of personnel, end of the period | 299 | 344 | 288 | ||||
| Key figures per share, € | 4–6/2024 | 4–6/2023 | Change % | 1–6/2024 | 1–6/2023 | Change % | 2023 |
| FFO per share * | 0.17 | 0.21 | -19.1 | 0.28 | 0.33 | -15.2 | 0.68 |
| Earnings per share | -0.34 | 0.23 | -247.8 | -0.21 | 0.31 | -167.7 | -0.36 |
| EPRA NRV per share | 18.16 | 19.50 | -6.9 | 18.45 | |||
| Equity per share | 14.50 | 15.46 | -6.2 | 14.67 | |||
| * In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alternative Performance Measures used by the Group in the Key figures, the formulas used in their calculation, and reconciliation calculations in accordance with ESMA guidelines section of the Half-Year Financial Report | |||||||
| ¹⁾ Including Non-current assets held for sale | |||||||
| ²⁾ Excluding Non-current assets held for sale | |||||||
Outlook for Kojamo in 2024
Kojamo reiterates its outlook issued on July 15, 2024, in which Kojamo estimates that in 2024, the Group’s total revenue will increase by 2–4 per cent (previously 4–7 per cent) year-on-year. In addition, Kojamo estimates that the Group’s FFO for 2024 will amount to between EUR 142–152 million, excluding non-recurring costs (previously EUR 152–164 million).
The outlook is based on the management’s assessment of total revenue, property maintenance expenses and repairs, administrative expenses, financial expenses and taxes to be paid as well as the management’s view on future developments in the operating environment.
The outlook takes into account the estimated occupancy rate and rises in rents. The outlook does not take into account the impact of potential acquisitions or disposals on total revenue and FFO.
The management can influence total revenue and FFO through the company’s business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.
CEO’s review
Total revenue and net rental income grew in the first half of the year. FFO decreased compared to the comparison period due to an increase in financial and maintenance expenses. Our financial key figures and liquidity situation have remained good.
The market situation was reflected in a decrease in our occupancy rate and affected the rent increases. The supply of apartments remains plentiful, and the competition for good residents has been intense. A number of previously started projects were completed, and in addition, unsold new owner-occupied housing has been moved into the rental market, delaying the correction of the supply situation. Although urbanisation continued to be strong, the oversupply situation did not start to dissipate yet in the spring.
The number of residential start-ups has been very low for a long time, and the number of granted building permits has declined further from the previous year. There is no clear sign of construction activity picking up, which is why the number of market-based apartments to be completed in the next couple of years will be very limited. At the same time, urbanisation is progressing. Population growth has remained strong in Helsinki, Tampere and Turku regions due to internal migration and immigration. These factors are still expected to balance the demand and supply of rental apartments and to lead to a reduction in the supply of rental apartments in the market. Our renting in July and at the beginning of August has been supportive for the guidance.
At the beginning of the year, few significant residential real estate transactions were made in Finland. However, in the second quarter, we increased the yield requirements for investment properties to reflect the completed transactions. The decrease in interest rates reduces the pressure to change yield requirements in the near future.
The saving programme launched last autumn has progressed according to the plan. Our goal is to maintain the company's strong financial position and adapt our operations to the challenges brought by the uncertainty in the real estate market and the higher interest rate environment. Investments this year will be exceptionally low. No new modernisation investments have been started, and we have reduced repairs other than those supporting renting of apartments. The personnel layoffs are still in effect, and in addition, we have brought efficiency to our operations by renewing our organisation. The savings in administrative and marketing expenses have been significant. Also, the decision made in the spring not to pay the dividend will help to keep the capital structure strong.
The last apartments under construction were completed at the end of June. We have a binding preliminary agreement for only one property. The situation is entirely exceptional in the company's history. In the short term, we focus on managing the existing housing portfolio and are not currently planning any new investments. In this way, we want to ensure that our financial situation will remain strong, our existing business will strengthen, and the goals of the saving programme will be achieved.
Positive signs in the operating environment are visible. Inflation has slowed down, and the decline in market interest rates seems to have started, although a rapid decrease in interest rates has not occurred. Due to the successful financing arrangements made in the early part of the year, our financial position is solid, which allows us to patiently await improvements in market conditions.
Jani Nieminen
CEO
News conference as a webcast
Kojamo will hold a news conference for institutional investors, analysts and media on 15 August 2024 at 10.00 a.m. EEST at the company’s head office at Mannerheimintie 168A, Helsinki. The event will be held in English. After the event, the media has a possibility to ask questions also in Finnish.
The event can also be followed as a live webcast through which it is possible to ask questions. No registration for the webcast in advance is needed. The event will be accessible at https://kojamo.videosync.fi/q2-2024.
A recording of the webcast will be available later at the company’s website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/.
For more information, please contact:
Niina Saarto, Director, Treasury & Investor Relations, Kojamo plc, tel. +358 20 508 3283, niina.saarto@kojamo.fi
Erik Hjelt, CFO, Kojamo plc, tel. +358 20 508 3225, erik.hjelt@kojamo.fi
Distribution:
Nasdaq Helsinki, Irish Stock Exchange, key media
Kojamo is Finland’s largest private residential real estate company and one of the biggest investors in Finland. Our mission is to create better urban housing. Lumo offers environmentally friendly housing and services for the city dweller who appreciates quality and effortlessness. We actively develop the value of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit https://kojamo.fi/en/
Attachments
Kojamo Half-Year Financial Report 1 January – 30 June 2024 (wkr0006.pdf)
Kojamo Half-Year Financial Report 1 January – 30 June 2024 presentation (Kojamo Half-Year Financial Report 1 January – 30 June 2024 presentation.pdf)