Summerset’s annual profit is down with higher wages expected to continue to be a drag on earnings over the coming year.
The retirement village operator’s net profit fell 18.3 percent to $175.3 million in the year to December, as expenses rose, while the construction of fewer living units contributed to lower growth in the value of its property portfolio.
Otherwise, the underlying profit, which excluded the valuation movements, rose 7.7 percent to $106.2m.
Revenue rose 12.4 percent to $153.9m as sales earned from resident fees surged in the fourth quarter.
Summerset chief executive Julian Cook said he did not expect further profit growth this financial year as it invested in higher wages for nurses and caregivers.
“We have increased our nurses’ wages between 2.5 percent to 5.7 percent to ensure we retain and attract high-quality nursing staff,” he said.
“We have also introduced additional penal rates for weekend work and will meet the company objective of matching the top payers in the sector.”
The company opened three new villages in the year, delivering 354 new homes, down from 454 last year.
It would open another three villages this year, one each in Napier, Tauranga and New Plymouth, with 152 new units in Christchurch and Hamilton due to open in March, including specialised care for residents with dementia.
The company had 19 villages, with another 12 in development, and 10 pieces of land yet to be developed.
It bought a second development site in Australia near Melbourne, while its first Australian village was due to open late 2021 or early 2022.
“Our research shows there’s an unmet demand for retirement villages in Australia, which offer a continuum of care model. This means accommodation from independent living through to fully supported rest home or hospital care.
“We hold enough land across New Zealand and Australia to build another 5,380 retirement units and 826 care beds, providing us with the flexibility to double the size of our business over time.”
This article was originally published on RNZ and re-published with permission.