Domain Holdings Australia Limited (ASX: DHG) has updated its current trading conditions and FY2023 cost expectations.
In the AGM, which was held on 09 November 2022, the Company indicated that the cost expectation between AU$275 million to AU$280 million was under review due to changes in the property market operating environment. Subsequent to this, the Company undertook a wide range of reviews, balancing its long-term aspirations for its Marketplace transformation with the reality of challenging current market conditions. Consequently, in FY2023, cost savings initiatives of AU$21-AU$26 million have been identified and implemented, with AU$6 million expected to benefit in 1H FY2023. In FY2023, the Company expects a cost between AU$250 million to AU$255 million, with ~AU$135 million expected for 1H FY2023.
The Company highlighted that the property market is challenging, and the condition has been deteriorating since the AGM Update. The 4% new listings growth delivered in Q1 FY2023 has been followed by a drop of 16% in October and 22% in November. December is experiencing an earlier than normal seasonal decline as agents and vendors defer listings into the CY2023.
Despite these cyclical challenges, DHG is encouraged by the robust results from the controllable elements of its business, particularly controllable yield, which is anticipated to rise ~6% in 1HFY2023. Furthermore, trends in new as well as upgraded depth contracts remain strong, with an 18% lift in new depth contracts & upgrades signed in November 2022 off a strong previous comparable period. This provides a platform for strong growth when cyclical conditions ease.
Following the release of this announcement, DHG shares tumbled 7.719% and is trading at AU$2.630 (AEDT 12:28 PM). The Company’s shares are in the list of top loser for 20 December 2022. In the last three months, the shares have dropped ~19%.
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