Scentre Group Share Price Dips on Dividend Announcement (ASX:SCG)

The share price of shopping centre company Scentre Group [ASX:SCG] is down slightly today after announcing its preliminary results and interim dividend.

At the time of writing the SCG share price is down 0.36%, trading at $2.78 per share.

Scentre Group - ASX SCG Share Price Chart

Source: Tradingview

Despite signs of a recovery in early-November, the retail property owner has struggled to claw back its losses caused by the current pandemic.

But with snap lockdowns threatening to be commonplace, a sense of wariness seems to have gripped the share price.

A second-half rebound not enough

In its estimated distribution announcement today, SCG said they are anticipating a stronger performance in the second half of calendar year 2020.

Although a second-half rebound is unlikely to result in a return in the dividends previously paid out by the retail property owner.

SCG say they expect revenue for the 12 months to December 2020 to be $2,357 million, down nearly 10% from 2019’s result of $2,616 million.

Revenue in H2 2020 did improve to $1,298 million from $1,059 million in the first half.

Net operating cash flow also improved, nearly doubling from $261 million in H1 to $510 million in H2.

The group said they saw a continued improvement in cash rental collections in the half, with approximately $1,182 million collected.

A stark improvement on H1’s $875 million in cash rental collections.

However, the improvement isn’t enough to boost the group’s dividend.

That will come in at 7 cents per share.

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A significant drop from last year’s dividend of 11.3 cents per share.

Are retail property groups a thing of the past?

It is certainly a difficult operation period for companies like Scentre Group — and for retailers too.

The surging popularity, spurred along by COVID-19 restrictions, does not play into the hand of brick-and-mortar retail asset owners either.

Even before the pandemic swept the globe, cracks were beginning to show.

In 2019, SCG’s net profit after tax dropped by 48.4% to $1,179.5 million.

That is despite their annual customer visits growing to more than 548 million that year and boasting over 7.5% of all retail sales in Australia.

A saving grace for companies like SCG is the death of our cities’ high streets.

With shopping complexes, like Scentre Group’s Westfield, transforming them to be essential social infrastructures, I don’t believe we’ll see these centres disappear anytime soon.

Although in my opinion, we aren’t going to see a resurgence in their financial performance anytime soon either.

Meaning dividends could continue to take a hit.

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Regards,

Lachlann Tierney
For The Rum Rebellion

 


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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