Safestore Reports Mixed Half-Year Results Amid Challenging Conditions
Why we think this is bad
The half-year results present a mixed picture, but with more concerning elements than positive ones. While revenue grew by 3.3%, underlying profit before tax declined by 11.0%, indicating significant margin pressure. The increase in net debt by £111.0 million is worrying, as is the decrease in underlying EBITDA margin from 61.4% to 58.5%. The company's outlook mentions challenging market conditions and inflationary cost headwinds, suggesting ongoing difficulties. These factors outweigh the positive aspects such as revenue growth and increased net asset value, pointing to a challenging period ahead for Safestore.
Key Points
- Revenue increased by 3.3% to £112.8 million
- Underlying profit before tax decreased by 11.0% to £43.6 million
- Net debt increased by £111.0 million to £1,010.5 million
- Underlying EBITDA margin decreased from 61.4% to 58.5%
- Entered Italian market through joint venture with Nuveen
- Facing challenging market conditions and inflationary cost headwinds
- Maintained development pipeline with 20 new stores planned
- Interim dividend increased by 1% to 10.1 pence per share
Summary
Safestore's half-year results show a mixed performance with revenue growth of 3.3% to £112.8 million, but an 11.0% decrease in underlying profit before tax to £43.6 million. The company faced challenging market conditions, particularly in the UK and Paris, with inflationary cost headwinds impacting profitability. Net debt increased by £111.0 million to £1,010.5 million, while the underlying EBITDA margin decreased from 61.4% to 58.5%. Despite these challenges, Safestore maintained its development pipeline and entered the Italian market through a joint venture. The company remains cautiously optimistic about trading outlook but acknowledges ongoing economic uncertainties.