“It will be a calendar year with two very different halves. There is a possibility that we may have peaked the interest rate cycle mid-year, so we could see a very healthy environment in the second half of this calendar year.”
The results beat analysts’ expectations, which had forecast sales of $611.2 million but missed profit. News Corp CEO Robert Thomson assured analysts on Friday that REA Group is a “core component” of the company’s portfolio. The Murdoch-controlled media company is in talks to sell its 80 percent stake in US real estate company Move, raising concerns among industry watchers that it may consider selling its 61 percent stake in REA Group.
“[REA Group] is a different company than Move and you can calculate what REA is worth to us. Its market cap is A$16.6 billion,” Thomson said on Friday. “We all owe a debt of gratitude to Lachlan Murdoch for his foresight of digital property.”
REA Group owns 20 percent of Move and would benefit from a successful transaction that could be worth up to $3 billion ($4.3 billion). Wilson declined to comment on the transaction.
News Corp also used its announcement to announce a 5 percent reduction in headcount across the company. This decision has no impact on REA Group, but Wilson confirmed that the company is also implementing its own cost control measures and also expects a workforce reduction by the end of this calendar year. He said most of this would happen organically by slowing down the hiring processes when a person leaves the company.
Shares in REA Group fell 2.6 percent to $121.2 in early morning trading, but analysts are bullish. UBS media analyst Lucy Huang spoke of a strong result.
“For now, the outlook commentary is relatively positive,” Huang said. “We remain vigilant on volumes in H2…it is probably too early to see the full impact of recent rate hikes on consumer-seller sentiment.”
It was “a strong result for REA, particularly Aus (residential) deep penetration,” she said, noting that the group had “significantly exceeded our expectations, suggesting REA may be taking more of a stake in the current uncertain environment.” “.
https://www.smh.com.au/business/companies/rea-boss-expects-interest-rate-rises-could-peak-mid-year-property-market-to-stabilise-20230210-p5cjip.html?ref=rss&utm_medium=rss&utm_source=rss_business REA boss expects rate hikes to peak mid-year and real estate market to stabilize