Instone Real Estate Group (INS) Q2 2024 earnings summary

Executive summary

• Delivered solid operating and financial performance in H1 2024, with adjusted revenue of €255.4 million (down 8.6% year-over-year) and adjusted EAT of €20.5 million, managing market crisis effectively and maintaining confidence in achieving full-year targets.

• Moderate demand recovery observed, with retail sales above last year's level and sales contract volume up 71% year-over-year to €121.9 million; institutional investors remain cautious but at least one deal is expected in H2 2024.

• Project portfolio expanded to €7.12 billion, with nearly 90% of under-construction projects pre-sold, providing stable future revenues and cash flows.

• Smoothing of debt maturity profile achieved through partial extension of promissory notes, supporting a strong balance sheet and high liquidity.

• Strong balance sheet, high liquidity, and leading profitability enable strategic land acquisitions in attractive cities.

Financial highlights

• Adjusted revenues for H1 2024 were €255.4 million, slightly below previous year but in line with expectations; adjusted gross profit was €65.6 million with a stable gross margin of 25.7%.

• Adjusted EBIT for H1 2024 was €33.4 million (down 22.9% year-over-year), and adjusted EAT was €20.5 million (down 14.2% year-over-year).

• Sales rose by 71% year-over-year to €122 million, with 281 units sold.

• Net financial debt increased to €204.2 million, with a net debt to EBITDA ratio of 2.5x and loan-to-cost ratio at 15.8%.

• Cash and cash equivalents and term deposits stood at €254.6 million, with access to €160 million in revolving credit facilities.

Outlook and guidance

• Full-year 2024 guidance reiterated: adjusted revenue €500–600 million, gross profit margin ~22%, adjusted EAT €30–40 million, and sales contract volume >€300 million.

• Expectation of continued demand recovery in H2, with further acceleration anticipated, supported by new sales starts and the Growth Opportunities Act.

• Gross margin expected to decrease slightly in H2 but remain above peer levels; lower tax rate of ~24% expected for FY 2024 due to higher JV earnings.