Instone Real Estate Group (INS) Q3 2024 earnings summary

Executive summary

• Delivered solid Q3 2024 results with strong cash generation, maintaining industry-leading profitability and on track to meet full-year targets despite challenging market conditions.

• Sales momentum accelerated since September, with retail demand improving and institutional investor sentiment showing signs of recovery.

• Adjusted revenue for the first nine months of 2024 was €384.5 million, down 11.3% year-over-year, mainly due to reduced construction services.

• Adjusted earnings after tax (EAT) reached €29 million, nearly meeting the lower end of full-year guidance, but down 21.8% year-over-year.

• Project portfolio grew to €7,111.0 million, driven by new acquisitions in Frankfurt and Düsseldorf.

Financial highlights

• 9M 2024 revenues: €384.5 million, down 11.3% year-over-year; gross profit margin: 24.2% (vs. 25.5% in 9M 2023).

• Adjusted EBIT was €45.4 million (down 31.0%), with an EBIT margin of 11.8%.

• Sales contracts volume increased 72% year-over-year to €156.6 million, with retail sales more than doubling to €89 million.

• Operating cash flow was €127.1 million, strengthening the balance sheet; cash and cash equivalents rose to €429.9 million, including restricted funds.

• Net financial debt decreased to €108.0 million from €186.8 million at year-end 2023; net financial debt/adjusted EBITDA at 1.5x.

Outlook and guidance

• Full-year 2024 guidance reiterated: revenues expected in the lower half of €500–600 million, adjusted earnings within €30–40 million, and sales target of over €300 million seen as realistic.

• Anticipates a strong Q4, with sales ratio and reservations at their highest since mid-2022 and at least one institutional deal expected.

• Expects significantly higher sales volume in 2025, especially if institutional market recovers.

• Lower tax rate of ~27% expected for FY 2024 due to higher JV earnings share.

• Forecast reflects slower unit sales and continued institutional investor reluctance due to higher interest rates.