Hammerson plc Profit More Than Doubles

Hammerson plc (LON: HMSO) earnings per share increase and the dividend is also bumped up.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 17 February, 2014 9:05 am GMT

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The shares of Hammerson (LSE: HMSO) increased 1% to 549p during early trade this morning after the commercial property company, with 20 shopping centres in the UK and France, posted a rise in profit boosted by strong demand for high-quality retail property. Over the previous 12 months Hammerson’s share price has increased 8%.

Profit increased from £142m last year to £341m for the year ended 31 December, as its malls traded well in concert with a gradually recovering UK economy, while new rents secured increased from £19m to £24m.

Like-for-line net rental income grew by 2.1%, demonstrating continuing tenant demand for Hammerson’s properties, which was slightly above a target of 2%.

Occupancy of 97.7% remains unchanged from a year ago and slightly exceeds the group’s benchmark level of 97%. The Les Terrases du Port shopping mall in Marseille, Hammerson’s first major retail development in France valued at £381m, is now 93% let and scheduled to open in May. This should be the largest French retail development to launch in 2014.

The chief executive, David Atkins, commented:

“We are seeing improving demand from retailers, and Hammerson is creating the right product to meet their future requirements, which provides the conditions for selected growth in rental values. We have clear visibility on a number of major development projects which will create the destination venues of the future, and drive returns to our shareholders. The first of these, Les Terrasses du Port in Marseille, will open in May this year. We remain on course to deliver strong growth in earnings and dividends over the medium term.”

Hammerson reported earnings per share of 23p, which is an increase of 8% on the previous year, while the final dividend per share also increased 8% to a little under 11p.

After today’s price movement the shares may therefore trade on a P/E of 24 and offer a potential income of 2%.

The decision to ‘buy’ — based on those ratings, today’s results, and the wider prospects of the water sector — is, of course, solely your own decision.