Aveo CEO Geoff Grady lifted the hem on the retirement group’s sales and income performance this week at the annual Macquarie Australia investor showcase.
44 weeks ago (27 June) Aveo was the centrepiece of the devastating Fairfax/Four Corners exposé on retirement villages and the DMF contract in particular, titled “Bleed Them Dry Until They Die”.
Aveo sales dropped from 29 homes a week to zero for the two weeks following. They report an average DMF of $71,000 so zero sales equates to $2 million in lost revenue per week. It took 19 weeks to get back to the 29 sales rate.
But Grady this week announced they are roughly on target to deliver their original forecast financial result for the full 12 months of the financial year.
They will be slightly down in sales (and revenue) from Established village homes but up on new Development village home sales and revenue.
Earnings per security will increase by 7.9% to 20.4 cents over FY17 and as importantly Return On Assets, Grady’s medium term benchmark for their business health, will be 7.5% to 8.0%.
Asked what his message for the SOURCE readers is, he said his team had made a tremendous effort from the moment the TV show went to air. Every area of the business was reviewed and customers addressed. They also immediately committed to a significant communications strategy to earn back ‘trust’.
Crucial is their Brisbane inner city 19-storey Newstead development that will deliver a big slice of its new sales. It takes in its first residents next month and is on target for 25% pre-sales (priced from $440,000 to $2.2 million and a 25% development margin).
Aveo prices crashed in July from $3.50 to $2.60 and have stayed there since. Perhaps a bargain: they expect the Net Tangible Asset value to be $3.80 by June 30.
Grady gives a detailed review of the actions taken by Aveo in our March LEADERS SUMMIT video HERE.