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Aug 9 (Reuters) - Australian property developer Mirvac Group on Thursday reported a 6 percent fall in full-year profit as a downturn in the country’s residential property market eroded sales.
Net profit fell to A$1.09 billion ($809.98 million) in its fiscal year ended June 30, from A$1.16 billion ($862.00 million) a year ago, the company said.
After years of double-digit gains, Australian house prices have recorded their biggest declines since the 2008 financial crisis as tighter lending standards and hikes in some mortgage rates sucked the life out of the sector.
Mirvac has tried to offset the slump by diversifying into commercial property development, which now generates roughly the same proportion of profit as home sales.
Commercial property, such as the property developer’s office and industrial segment, brought in pre-tax profit of A$381 million, up from A$319 million on the prior year.
Meanwhile, the residential division brought in A$300 million in pre-tax profit during the year, slightly lower than the A$302 million from a year ago.
An uptick in building approvals in Australia's major cities helped mitigate soft home lending and a bleak outlook for construction activity. Data by the Australian Bureau of Statistics showed a 6.4 percent rise in approvals in June from a month earlier. (bit.ly/1SjaRTb)
Mirvac Chief Executive Susan Lloyd-Hurwitz said, “As we have expected, market conditions in the residential sector have normalised.”
The firm added that it would pay a final distribution of 6 Australian cents per share and sees distribution during 2019 to be 11.6 cents per share.
Full-year operating profit after tax, which excludes one-off items, rose 9 percent to A$580 million. ($1 = 1.3457 Australian dollars) (Reporting by Nikhil Kurian Nainan in Bengaluru Editing by Byron Kaye, Chris Reese and Cynthia Osterman)