Deutsche EuroShop confirms forecast after a successful FY 2008 (DE)

At its annual earnings press conference in Hamburg on Friday April 24, shopping center investor Deutsche EuroShop AG presented its results for the past financial year. The Company exceeded again its own revenue and earnings forecasts. Deutsche EuroShop has proven once again that it has an outstanding shopping center portfolio and is well positioned, even in these difficult times for the economy and the real estate markets.

Consolidated revenue was up 20.4% from €95.8 million to €115.3 million in the financial year. The Stadt-Galerie in Hameln, the Stadt-Galerie in Passau and the Galeria Baltycka in Gdansk, which opened in October 2007, made a significant contribution to this growth in revenue. For the most part, rental income for the portfolio properties developed positively. Total revenue rose by 2.0% on a like-for-like basis.

As in the previous year, the vacancy rate was under 1%. At €0.3 million (2007: €0.2 million) or 0.2% (2007: 0.2%), the need for write-downs for rent losses remained at a very low level.

Net finance costs were up €8.6 million to €48.2 million, after €39.6 million in the previous year. This rise is mainly attributable to according to plan higher interest expense (€+5.9 million compared with the previous year). In addition to this the share of operating profit attributable to minority shareholders was €2.6 million above the level of the previous year (€3.6 million) at €6.2 million.

Measurement gains fell year-on-year by €1.9 million from €39.0 million to €37.1 million. Initial measurement of the shopping centers in Hameln and Passau resulted in net measurement gains of €12.0 million. The rise in value of the portfolio properties is mainly attributable to the Galeria Baltycka in Poland, whose earnings to date far exceed original planning, resulting in a market value around 19% higher than the level of the previous year.

Following net tax income of €16.3 million in the previous year due to a reversal of deferred tax provisions that was recognized in income as a result of the German business tax reform, the tax burden in the period under review amounted to €18.1 million.

Earnings before interest and taxes (EBIT) climbed 25% from €78.5 million to €98.1 million in the reporting year. At €87.0 million, pre-tax profit (EBT) was 12% higher than in the previous year (€77.8 million). Consolidated profit fell by 27% from €94.2 million to €68.9 million.

Earnings per share (basic) amounted to €2.00 compared with €2.74 in the previous year. Of this amount, €1.13 (2007: €0.94) was attributable to operations (+20%) and €0.87 (2007: €0.94) to measurement gains (-8%). Furthermore, in the previous year additional profit of €0.86 per share was generated from the reversal of deferred tax provisions.

2008 an FFO (Funds from Operation) of €49.8 million or €1.45 per share was posted. On the basis of the current share price this equals to a FFO yield of approx. 7%. Net asset value (NAV) as at 31 December 2008 was €942.8 million (€27.43 per share) compared with €925.1 million (€26.91 per share) in the previous year.

Due to the successful financial year, the Executive Board and Supervisory Board will propose to the shareholders at the Annual General Meeting on 30 June 2009 in Hamburg that an unchanged dividend of €1.05 per share be distributed for the 2008 financial year.

Forecast
For the 2009 financial year, Deutsche EuroShop is anticipating revenue of between €125 million and €128 million. The openings of the Stadt-Galerie shopping centers in Hameln and Passau, which will contribute to revenue for a full financial 

year, Deutsche EuroShop is anticipating revenue of between €125 million and €128 million. The openings of the Stadt-Galerie shopping centers in Hameln and Passau, which will contribute to revenue for a full financial year for the first time, will have an effect in this regard, as will the first-time consolidation of the City-Point in Kassel, in which Deutsche EuroShop increased its investment from 40% to 90% in January 2009. In the 2010 financial year, revenue should increase to between €128 million and €131 million.

According to the forecast, earnings before interest and taxes (EBIT) will amount to between €105 million and €108 million in the current financial year. This is expected to increase to between €109 million and €112 million in 2010.

The Company expects the earnings before tax (EBT) excluding measurement gains and losses to be between €50 million and €52 million for financial year 2009 and between €53 million and €55 million for financial year 2010.

FFO is expected to be between €1.45 and €1.50 in 2009 and between €1.55 and €1.60 in the 2010 financial year.

Source: Deutsche EuroShop