Domain Group Reports Tough Financial Year 2020 with Profits down 40%

Australia’s number two property portal company Domain Group has released its financial results for 2020 to investors. The results reflect some tough market conditions as well as the hit taken by the portal from a goodwill impairment charge of $256 million. Key numbers from the results include:

• Net debt reduced from $147.9 million to $105.8 million

• Revenue down -9% to $216.6 million

• EBITDA down -17% to $84.4 million

• Net profit down -40% to $21.6 million

Although Domain was able to cut down on net debt and reduce expenses by 5%, thanks in part to a 24% reduction in cost per lead and a 3% reduction in staffing costs, the discounts given to agents as well as declining listings volumes have taken their toll on the bottom line. Listing volumes were down across the country in H1 and only recovered above 2019 levels for H2 in Sydney and Melbourne.

As for positives, the group’s share price has recovered most of its value ($3.56 per share on the 20th of August) since its March slide (a low of $1.72 on the 23rd of March) and CEO and Managing Director, Jason Pellegrino believes the underlying market conditions for a successful business are still there:

“Despite the challenges brought about by COVID-19 in the fourth quarter, Domain’s key assets of large engaged audiences, effective listings parity and innovative solutions continued to deliver value to agents and consumers.”

Despite everything, Domain is still a profitable business and Pellegrino was upbeat in his closing remarks to investors regarding the road ahead for the business:

“Domain’s ability to continue to execute on our strategy, respond to COVID-19, and progress the evolution of our business model, highlight the strength of the business and the people who work in it. Notwithstanding the considerable uncertainties that lie ahead, we look forward to another year of inspiring confidence for all of life’s property decisions.”

Although Domain’s results published today ought to be viewed in the broader context of a global pandemic int the second half of the financial year as well as unfavourable domestic market conditions in the first half, there isn’t much of a silver lining for the company. Earlier this month Domain’s main rival REA Group posted much a more positive set of results for the financial year with net profits down only 9% and EBITDA of $492 million, down only 5% year on year.