CITYCON OYJ Interim Report 23 April 2020 at 09:00 hrs
- Our strategy to focus on urban, grocery-anchored shopping centres gives stability
- Like-for-like net rental income increased
- Impact of COVID-19 was mostly limited to the latter part of March in Q1/2020
- Footfall and tenant sales remained close to prior year level
- Weaker NOK and SEK exchange rates affected the results
JANUARY—MARCH 2020
- Net rental income was EUR 52.4 million (Q1/2019: 53.6). The acquisition in Norway closed in February 2020 increased net rental income by EUR 1.7 million. This was offset by impact of weaker currencies and divestments made in 2019 that reduced net rental income by EUR 1.6 million and EUR 1.2 million respectively. Net rental income in comparable assets increased.
- EPRA Earnings decreased slightly to EUR 34.8 million (35.8) as result of currency changes, lower share of profit of joint ventures and associated companies. EPRA Earnings per share (basic) was EUR 0.195 (0.201), impact from weaker currencies was EUR 0.008 per share.
- Adjusted EPRA earnings decreased to EUR 30.8 million (35.8) due to hybrid bond coupons
- IFRS-based earnings per share was EUR 0.06 (0.07) as a result of lower net rental income, hybrid bond coupons and expenses and lower share of profit of joint ventures.
KEY FIGURES
| Q1/2020 | Q1/2019 | % | Comparable change % 1) |
2019 | ||
| Net rental income | MEUR | 52.4 | 53.6 | -2.3 % | 0.6 % | 217.4 |
| Direct Operating profit 2) | MEUR | 46.2 | 47.7 | -3.1 % | 0.1 % | 193.5 |
| IFRS Earnings per share (basic) 3) | EUR | 0.06 | 0.07 | -22.9 % | -19.9 % | 0.04 |
| Fair value of investment properties | MEUR | 4,081.5 | 4,213.5 | -3.1 % | - | 4,160.2 |
| Loan to Value (LTV) 2) | % | 45.7 | 48.7 | -6.2 % | - | 42.4 |
| EPRA based key figures 2) | ||||||
| EPRA Earnings | MEUR | 34.8 | 35.8 | -2.8 % | 1.0 % | 145.6 |
| Adjusted EPRA Earnings 3) | MEUR | 30.8 | 35.8 | -14.0 % | -10.6 % | 143.9 |
| EPRA Earnings per share (basic) | EUR | 0.195 | 0.201 | -2.8 % | 1.0 % | 0.818 |
| Adjusted EPRA Earnings per share (basic) 3) | EUR | 0.173 | 0.201 | -14.0 % | -10.6 % | 0.809 |
| EPRA NAV per share | EUR | 11.36 | 12.98 | -12.5 % | - | 12.28 |
1) Change from previous year (comparable exchange rates). Change-% is calculated from exact figures.
2) Citycon presents alternative performance measures according to the European Securities and Markets Authority (ESMA) guidelines. More information is presented in Basis of Preparation and Accounting Policies in the notes to the accounts.
3) The adjusted key figure includes hybrid bond coupons and amortized fees.
CEO F. SCOTT BALL:
“The COVID-19 outbreak has rapidly reached the scale of global pandemic and is severely affecting our lives on individual, societal and global level. Citycon, like all other companies, has faced a rapid change in its operating environment.
At the operational level, Q1/2020 was a good quarter for Citycon while the implications of COVID-19 started to show during the latter half of March. At comparable rates both our like-for-like net rental income and our EPRA earnings increased. However, including the negative impact of the exchange rates our net rental income and EPRA earnings somewhat declined. Footfall declined by 3% percent as a result of government restrictions. Occupancy rate slightly decreased but remained still at a high level. Loan to value slightly increased to 45.7% compared to Q4/2019.
During the time of unusual events our strategy to focus on urban, grocery-anchored shopping centres gives us stability. Our tenant mix has a relatively high proportion of groceries, healthcare, pharmacies and social services balancing the challenges of the retail sector. Our conservative financing strategy and strong liquidity give financial strength and support our ability to meet our commitments towards all our stakeholders. As an additional measure, we have suspended all uncommitted capex except for tenant allowances. Having said this, COVID-19 will have an impact on our business in the near-term. As disclosed in March, our operations will be affected by the legitimate and necessary government restrictions in our operating countries and the turmoil in the financial markets. We are working together with our tenants and all other stakeholders to find solutions to overcome the variety of challenges and to mitigate the impact of the crisis.
Simultaneously, we are committed to delivering our long-term strategy, thus the Citycon team is fully engaged with providing the best retail locations in urban community hubs. Our main target is to support the business of our tenants and surrounding communities also after the crisis. Appeal of our community hubs was once again demonstrated in February 2020 by agreeing on a new lease contract with Espoo City library. The library will be located in our new development project, Lippulaiva, that is progressing as planned.
In the Nordics, resolving the challenges are seen as a common project. Governments are proactively engaged with not only securing citizens’ health and safety but also preserving the economic viability of businesses through various means of economic support. These means vary by country but include e.g. direct subsidies for companies to cover their fixed costs and government guarantees for company loans. As governments, organisations and individuals strive to slow down the outbreak and to mitigate the consequences, our responsibility at Citycon is to secure the continuance of our operations and availability of the necessity-based services provided at our premises. Safety of our customers, tenants and personnel remain a top priority during the crisis.
I am extremely proud of the Citycon management team and all employees and how they have managed the business through this crisis. Our infrastructure has allowed our team to work efficiently from remote locations and I am confident that we will come through this crisis stronger and better.”
OUTLOOK FOR THE YEAR 2020
On 26 March 2020, Citycon Oyj assessed that its prospects for 2020 have weakened and the company withdrew its guidance for 2020 issued on 6 February 2020. At this point, the company does not specify its direct operating profit, EPRA EPS or adjusted EPRA EPS forecast for this year due to significant uncertainty in the operating environment caused by COVID-19 outbreak.
EVENTS AFTER THE REPORTING PERIOD
No material events after the reporting period.
AUDIOCAST
Citycon's investor, analyst and press conference call and live audiocasting will arranged on Thursday 23 April 2020 approximately at 10 am EEST. The audiocast can be participated by calling in and followed live on the following website: https://citycon.videosync.fi/2020-q1-results/register
Conference call numbers are:
Participants from Europe +44 3333000804
Participants from the US +1 6319131422
PIN: 52260832#
The audiocast will be recorded and it will be available afterwards on Citycon’s website.
For more investor information, please visit the company’s website at www.citycon.com
Helsinki, 22 April 2020
Citycon Oyj
Board of Directors
For further information, please contact:
Eero Sihvonen
Executive VP and CFO
Tel. +358 50 557 9137
eero.sihvonen@citycon.com
Laura Jauhiainen
IR Director
Tel. +358 40 823 9497
laura.jauhiainen@citycon.com
Citycon is a leading owner, manager and developer of urban, grocery-anchored shopping centres in the Nordic region, managing assets that total almost EUR 4.5 billion. Citycon is No. 1 shopping centre owner in Finland and among the market leaders in Norway, Sweden and Estonia. Citycon has also established a foothold in Denmark.
Citycon has investment-grade credit ratings from Moody's (Baa3) and Standard & Poor's (BBB-). Citycon Oyj’s share is listed in Nasdaq Helsinki.