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Watkin Jones PLC shares plunged on Tuesday as it said it expects to miss full-year profit expectations, however outlook remains positive.
Shares in the London-based student accommodation developer and manager were down 33% to 102.05 pence each in London on Tuesday morning.
Watkin Jones said that in the first half of its financial year to September 30 cost inflation was mitigated by increasing asset values, however in the second half it saw some pricing and margin ‘softness’ on sales.
It added that two forward sales which were expected to close in September have been impacted by recent market volatility, and are now expected to go through in financial year 2023.
However, the company said that investor demand for residential for rent assets has remained strong, with total forward sales in year jumping to £900 million from £300 million in the first half of the year.
Watkin Jones explained that whilst the second half of the financial year was marginally stronger than the first half, it now expects full-year underlying operating profit to be around 10% below current market expectations.
Looking ahead, Watkin Jones said it has ‘very good visibility’ over its development pipeline, despite uncertainty around macroeconomic conditions in the short term.
It added that it has around £270 million revenue secured for financial year 2023 and it expects demand from institutions for residential for rent assets to remain robust.
‘However we also believe it is prudent to assume that margin pressure as a result of purchasers' elevated borrowing costs will continue into financial year 2023,’ the company noted.
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