‘Revitalised sales, refined pricing’ drives solid returns for Oceania Healthcare

Thursday, 22 May 2025

Occupancy of The Helier, Oceania’s luxury retirement village in Auckland, has increased to 41% from 14%.

Increasing momentum in retirement village sales was not enough to prevent Oceania Healthcare reporting a decline in after tax profit over the year to the end of March.

The NZX-listed retirement village operator has announced net profit after tax of $30.4 million, down 3.5% from $31.5m profit over the same period last year.

But the company’s total comprehensive income increased to $74.6m from $70.5m, and its underlying EBITDA rose 4.1% to $86.0m.

The increase in EBITDA was despite a 1.8% reduction in operating revenue, higher expenses and continued sales, and was driven by a 22.6% increase in capital gains, it said.

Oceania also reported the value of its portfolio increased to $2.9 billion, an $158m increase on the previous year. That was due to the completion of its Waterford and Awatere villages in Auckland and Hamilton, and its Elmwood care suite centre in Auckland.

Oceania has completed the its redevelopment of The Waterford retirement village in Auckland’s Hobsonville Point.

Sales results were a focus of the company’s report to the NZX, in line with Oceania chief executive officer Suzanne Dvorak’s commitment to improve sales capability late last year.

Despite market conditions, sales momentum accelerated in the second half of the year, and the company’s total sales volumes increased by 9.2% on the previous year, it said.

Sales of new units and care suites rose by 17.2%, while resales were up by 5.3%.

“This growth was driven by a revitalised sales and marketing approach, refined pricing strategies, and enhanced leadership in sales,” it said. “Strong sell down results were achieved across key development sites.”

There were 24 sales at The Helier, Oceania’s flagship luxury village in Auckland, an 100% increase on the previous year which was the village’s launch year.

It left occupancy in the 111 apartment village at 41%, up from 14% at the end of March last year, but the company said it expected full development cost recovery on the village by the 2026 financial year.

But sales at Oceania’s other new facilities had been strong, the company said.

Oceania has seen higher cash receipts from occupation right agreements, chairperson Liz Coutts says.

All the independent living apartments at The Bellevue in Christchurch had now been sold, within two years of its opening, and its new Redwood care suite centre in Blenheim reached 62% occupancy in record time, and was expected to be fully occupied within a year.

In the report accompanying the results, chairperson Liz Coutts said Oceania continued to successfully transform its portfolio and optimise its operating model, and had delivered a solid financial result in the year to March.

“New development stock continued to be sold down, a number of developments were completed or progressed, and the divestment of six older non-core sites were settled.”

Operating cash flow increased by 6.7% to $110.3m from $103.4m in the previous year, she said.

“This was driven by higher cash receipts from occupation right agreements, up 30.1%, reflecting key drivers such as improved settlement timing, reduced unsold stock, and increased care revenue.”

The company's undrawn net debt headroom was $97.0m and gearing reduced to 36.3%, down from 38.3%, she said.

“This improvement reflects continued capital discipline, divestment of non core assets, a sharpened sales focus and a targeted cost optimisation programme.”

The Helier is selling well and that suggests sales issues are being resolved, Nikko Asset Management’s Tim O’Loan says.

Oceania chief executive Suzanne Dvorak said the company had initiated a right sizing programme to reshape the business and align with its future strategy.

To date it had implemented cost savings of $5m that would be realised in 2026, and led to a broader business optimisation programme which was targeting $10m to $15m of sustainable annualised savings, she said.

“Over the next year, Oceania will continue to sharpen execution, reinforce leadership capability, and ensure the business is well positioned to activate its new strategy from 2027.

The board had approved a new strategic direction to guide Oceania through the next five years, and it was designed to meet changing resident expectations, increasing care needs, and a more complex operating environment, she said.

Nikko Asset Management retirement village specialist Tim O’Loan said Oceania had overcome a tough trading environment and some idiosyncratic issues around sales to produce a decent result.

Positive momentum in sales volume was a stand out of the results, he said.

“With The Helier, which had been a focus for the market, selling well, it appears that these sales issues are being resolved and the market should view this positively.”

But investors seeking comfort about the near term performance of Oceania and the wider sector would be disappointed by the lack of direct commentary on the trading environment in materials released on Thursday, he said.