Franchise News

McGrath’s momentum continues with strong predicted earnings

McGrath has announced its predicted earnings for the 2021 financial year, with the group’s underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) expected to be more than four times what it was the year prior.

On Monday, McGrath released an announcement on the Australia Securities Exchange (ASX) noting the group’s recent positive momentum continued into the second half of the financial year, with McGrath now forecast to have an underlying EBITDA in the range of $16.5 million to $17.5 million, compared with $3.7 million in 2019/20.

It follows the release of the group’s half-year results on February 22 which showed an underlying EBITDA of $6.6 million, compared with $1.6 million for the prior corresponding period.

The earning expectation comes on the back of positive market momentum and increased sales volumes.

McGrath’s ASX announcement noted:

• In the March quarter, national home values rose 5.8 per cent – the highest quarterly growth rate since October 2003.

• Sales volumes increased 12.6 per cent nationally over the 12 months to March, with regional areas performing strongly.

• February 2021 seasonally adjusted year-on-year new household borrower commitments rose 48.8 per cent.

McGrath Founder and Executive Director, John McGrath said the group was seeking to take advantage of the strong market, with the results evident in the predicted earnings.

“Our unique business model of combining the strong annuity style income derived from property management and franchise operations alongside our company owned sales offices is delivering strong results,” Mr McGrath said.

“And in my opinion, we have the best agents in the country and we have been able to take advantage of the strong market.”

McGrath CEO, Eddie Law noted the strength in the residential property market continued throughout the third financial quarter of 2020/21.

“The combination of improving business and consumer sentiment, record low interest rates and lower stock levels in the market, has driven strong price growth in recent months,” he said.

McGrath will now be looking to capitalise on recent gains with continued business improvement initiatives.

These include the implementation of growth strategies to improve agent productivity, continued traction from the newly launched data centric website and other digital solutions, and revitalisation of the property management businesses, with a focus on improving the overall customer experience.  

“We are particularly pleased with our performance across the multiple markets in which we operate and our business improvement initiatives are bearing fruit across our business segments,” Mr Law said.

“Trading continues to be positive and with the latest trends in GDP growth rates and record low interest rates, have provided us with the confidence about our earnings guidance for the full year.”

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