- Cedar Woods (CWP) says that it is well positioned to weather the COVID-19 storm, but the worst may be yet to come
- Pre-sales were down four per cent at the end of March this year, and may take longer to settle than usual
- Weak buyer demand has also had an impact on enquiry and sales volumes, while virus-mitigation measures are slowing construction efforts
- However, government-issued stimulus packages for the housing sector are likely to boost sales in the future
- Cedar Woods is steady on the market this morning and shares are trading for just over $4
Cedar Woods (CWP) says that it is well positioned to weather the COVID-19 storm, but acknowledged that the worst may be yet to come.
In an announcement dated March 20 this year, the company referenced a host of proactive measures designed to safeguard staff, customers and projects. Cedar Woods also reassessed its cost and balance sheet management, and adjusted its sales and marketing functions.
However, these policies have not been able to offset a decrease in buyer demand, and the implementation of social distancing requirements is slowing construction efforts.
While Cedar Woods’ sales centres remain open, pre-sales as of the end of March were down four per cent to $363 million, compared to $380 million last year.
With social restrictions still in place and ongoing project disruptions, the company is expecting a significant proportion of its settlements to spill over into FY21.
However, Nathan Blackburne, Managing Director of Cedar Woods, was quick to point out that the company’s diversification by geography, project type and price point will continue to offer some relief until market conditions improve.
“It has been pleasing that we have completed a number of stages in the third quarter, although now we are seeing impacts of COVID-19 on our development timetables and this is expected to delay some FY2020 settlements, pushing them into FY21,” Nathan commented.
“Our strong balance sheet, low gearing and strong support from our financiers also positions us well to endure the current downturn and capitalise on opportunities that may arise during the recovery phase,” he said.
With sufficient cash reserves to fund its ongoing requirements, Cedar Woods referenced projects in Western Australia, Victoria and Queensland that are nearing completion, and are expected to settle from the fourth quarter of FY20 onwards.
The company is also anticipating state and federal government stimulus packages for the housing sector, which are expected to significantly boost sales in the medium-term.
Cedar Woods is steady on the market this morning and shares are trading for $4.01 each at 10:46 am AEST.