EQS-News: Instone Real Estate Group SE
Instone Group is poised to meet its full-year targets with robust business performance and a noticeable uptick in private demand.
- In the first nine months of 2024, adjusted revenues reached EUR 384.5 million, a slight dip from EUR 433.3 million in the same period of 2023, aligning with market expectations.
- The adjusted gross profit margin remains strong at 24.2 percent for 9M-2024, only marginally down from 25.5 percent in 9M-2023, reflecting the high quality of Instone’s project portfolio and efficient cost management strategies.
- Significant sales of EUR 156.6 million were recorded, a considerable increase from EUR 91.3 million in 9M-2023, indicative of a robust recovery in market demand; with Q4-2024 projected to yield strong seasonal gains.
- Adjusted earnings after tax stood at EUR 29.0 million, compared to EUR 37.1 million in the prior year, demonstrating that Instone Group is on track to meet its annual earnings goals amidst evolving market conditions.
- High operating cash flow of EUR 127.1 million has further bolstered Instone’s balance sheet, resulting in an impressive loan-to-cost ratio of 8.8 percent, positioning the company favorably to capitalize on available growth opportunities.
- The financial outlook for 2024 remains confirmed, anticipating adjusted revenues of EUR 500 to 600 million and adjusted earnings after tax between EUR 30 to 40 million.
Instone Group maintains leading profitability in a difficult market environment.
The company’s adjusted gross profit margin of 24.2 percent amidst ongoing challenges reinforces its position as a market leader. This profitability is a testament to the high quality of Instone’s diverse project portfolio and enhanced by structural advantages, including economies of scale in purchasing and vertical integration through in-house construction management.
Demand picking up noticeably in retail sales.
Despite a prevailing cautious stance from institutional investors, Instone Group is optimistic about finalizing at least one additional institutional transaction in the upcoming fourth quarter of 2024, which will contribute positively to their annual targets.
High operating cash flow leads to further strengthening of the balance sheet.
The company recorded an impressive operating cash flow of EUR 127.1 million in the first three quarters, primarily driven by previously sold projects, further enhancing its financial stability. This strong balance sheet empowers Instone Group to pursue advantageous growth opportunities amidst the current market landscape.
As of September 30, 2024, the company’s loan-to-cost ratio has significantly improved to 8.8 percent from 15.1 percent as of December 31, 2023, indicating a robust balance sheet. Additionally, the net debt to adjusted EBITDA ratio stands at 1.5x, reflecting prudent financial management.
Freely available cash at the end of September 2024 amounted to approximately EUR 270 million, augmented by substantial unused credit facilities and project financing lines, providing a solid foundation for future growth.
Attractive project portfolio offers significant revenue potential for the coming years.
The Instone Group’s project portfolio, representing a gross development value of around EUR 7.1 billion as of the end of the quarter, showcases continued growth since the last reporting date. This growth is attributed to two strategically acquired projects in Frankfurt and Düsseldorf, with an anticipated future sales value exceeding EUR 260 million, effectively compensating for previous project completions.
Approximately EUR 2.9 billion of the portfolio is in construction, with around 91 percent already sold. This strong sales performance ensures high visibility for future revenues and cash flows while substantially mitigating risk.
“Our results demonstrate that we are well positioned to achieve our 2024 targets in a challenging landscape. Increasing signs of demand recovery indicate promising long-term growth prospects driven by the ongoing housing shortage,” states Kruno Crepulja, CEO of Instone Real Estate Group SE.
Outlook for 2024 confirmed.
Following the results from the first three quarters of 2024, the Management Board reaffirms its financial outlook, predicting adjusted revenues of EUR 500 to 600 million, an adjusted gross profit margin around 22 percent, adjusted earnings after tax between EUR 30 and 40 million, and total sales of at least EUR 300 million.
The definitions of the key performance indicators mentioned in the release can be found in the glossary on the company’s website at: Glossary: Instone Real Estate Group SE
About Instone Real Estate Group SE (Instone Group)
As one of Germany’s leading residential developers listed on the Prime Standard of the German stock exchange since 1991, Instone Group specializes in the development of sustainable urban residential quarters. Offering apartments for sale and rent across the country, the Group strives to enhance urban living conditions in Germany’s metropolitan areas. With a dedicated team of 418 employees spread across nine locations in Germany, Instone combines diverse expertise with efficient processes, creating substantial value for stakeholders in social, environmental, and economic contexts. As of September 30, 2024, the company boasts a project portfolio encompassing 45 development projects, anticipating an overall sales volume of around EUR 7.1 billion and approximately 14,700 residential units. www.instone-group.de/en
Investor Relations
Burkhard Sawazki
Grugaplatz 2-4, 45131 Essen, Germany
Tel.: +49 (0)201 45355-137
Email: [email protected]
Press
Franziska Jenkel
Chausseestr, 111, 10115 Berlin, Germany
Tel.: +49 (0)30/6109102-36
Email: [email protected]
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**Interview with Kruno Crepulja, CEO of Instone Real Estate Group SE**
**Interviewer:** Thank you for joining us today, Kruno. Instone Real Estate Group SE has released its Q3 2024 financial results. Can you summarize the key takeaways from this report?
**Kruno Crepulja:** Thank you for having me! We’re pleased to report that despite some challenges, Instone has shown robust business performance. In the first nine months of 2024, our adjusted revenues reached EUR 384.5 million, which, while slightly down from last year, is in line with market expectations. Importantly, we saw a significant increase in sales—up to EUR 156.6 million compared to EUR 91.3 million in the same period last year—indicating a solid recovery in market demand.
**Interviewer:** It sounds like there are positive signs for the company’s profitability. Can you elaborate on that?
**Kruno Crepulja:** Certainly. We maintained a strong adjusted gross profit margin of 24.2 percent, which is only marginally down from 25.5 percent last year. This consistency reflects the quality of our project portfolio and our effective cost management strategies. Additionally, our operating cash flow remained impressive at EUR 127.1 million, which strengthens our balance sheet and positions us favorably for future opportunities.
**Interviewer:** The real estate market has faced several hurdles recently. How has Instone managed to navigate these challenges?
**Kruno Crepulja:** Our strategy has been to maintain high quality across our project portfolio and leverage economies of scale. We are also looking to finalize additional institutional transactions in the fourth quarter, despite a cautious sentiment among institutional investors. This outcome could further contribute to our annual targets and reflect our adaptive approach in a challenging market.
**Interviewer:** Speaking of future prospects, how does the outlook for 2024 shape up for Instone?
**Kruno Crepulja:** We remain optimistic and have reaffirmed our financial outlook for the next year, anticipating adjusted revenues between EUR 500 to 600 million and adjusted earnings after tax of EUR 30 to 40 million. Our attractive project portfolio, which includes around EUR 7.1 billion in gross development value, is set to facilitate significant revenue potential moving forward, even amid an ongoing housing shortage.
**Interviewer:** With your strong cash position and portfolio, what does the company’s strategy involve moving forward?
**Kruno Crepulja:** We plan to harness our solid balance sheet, which features approximately EUR 270 million in freely available cash, alongside unused credit facilities. This will allow us to pursue advantageous growth opportunities. Our focus remains on enhancing our project portfolio and achieving our financial targets while providing value to our stakeholders.
**Interviewer:** Thank you for sharing these insights, Kruno. It’s certainly an exciting time for Instone Real Estate Group SE.
**Kruno Crepulja:** Thank you! We are committed to maintaining transparency and delivering results in this ever-evolving market landscape.
