Westfield Affected By Global Recession

Submitted by Share Trading on 28 January, 2009 - 12:52

While Australian shares rose by 0.6% yesterday, Westfield (WDC) has seen a drop in share price after the announcement made by the company regarding the distribution cut. The company said that the net profit for the year 2008 till December would reflect a $3 billion charge against shopping centre assets because of an increase in capitalisation rates. The company also added that operational segment earnings for the year to December 2009 would be between $0.97 and $1.00 per security, down from an estimated $1.00 in 2008, with strong growth from its Australian malls offsetting weakness in the United States, Britain and New Zealand.

Westfield traded down 4.2 percent at $11.63 after warning its operating earnings in 2009 would be flat to slightly lower. Commenting on the issue an analyst said, “People had been anticipating this for some time and that started to be reflected in the price. You might see money coming back in, now that the effective downgrade's out of the way”. In a statement, the group said there will be some upside in the results from the strengthening US dollar over the course of 2008, taking total assets to about $50.4 billion.

It was expected that Westfield’s earnings per share of 100.4 cents and a steady distribution of 106.5 cents a share in 2009. Shaw Stock broking research director Scott Marshall said “I would have expected Westfield's security price to fall closer to the $19.00 mark”. “Westfield's securities are currently trading at a yield of about five per cent” Marshall said and added that “Some brokers are saying it is underperforming and should soon start outperforming”. Group assets at December 31, 2008 would exceed the $76 billion reported at June 30, 2008, primarily because of the strengthening of US dollar. WDC’s shares slid 7.4 % on Tuesday. New Zealand's benchmark NZX 50 index was down 0.3 points at 2,735.5.