IRSA Inversiones y Representaciones S.A announces its results for the second quarter of Fiscal Year 2024 ended December 31, 2023
- Significant increase in net result for the second quarter compared to the previous year
- Rental adjusted EBITDA reached ARS 54,102 million, driven by shopping malls and hotels segments
- Total adjusted EBITDA reached ARS 66,940 million, a 54.6% increase from the previous year
- Growth in malls' tenant real sales and occupancy rates
- Premium office segment reached 92.8% occupancy
- Market capitalization was approximately USD 634 million as of December 31, 2023
- None.
Insights
The reported financial results of IRSA Inversiones y Representaciones S.A. show a substantial increase in net results, with a gain of ARS 146,593 million in the second quarter of fiscal year 2024, which is significantly higher than the ARS 48,072 million reported in the corresponding period of the previous year. This gain is primarily attributed to the increase in the fair value of investment properties. Such a substantial gain suggests a positive revaluation of the company's real estate portfolio, which could be indicative of an improving real estate market in Argentina or successful strategic management of the company's assets.
The reported growth in rental adjusted EBITDA by 12.3% and the increase in total adjusted EBITDA by 54.6% reflect an operational improvement, particularly in the shopping malls and hotels segments. These figures are important as they demonstrate the company's ability to generate earnings before interest, taxes, depreciation and amortization, which is a key indicator of a company's financial performance and its ability to generate cash flow from its core business operations.
The shopping malls' tenant real sales growth of 8.9% and high occupancy rates in both malls and premium office spaces indicate a robust demand in these sectors. These factors are crucial for investors as they suggest sustained revenue streams and the potential for future growth. The sale of additional floors in the '200 Della Paolera' building also signifies active portfolio management and asset monetization.
The completion of the cash dividend and treasury shares distribution is a significant event for shareholders and reflects the company's commitment to returning value to its investors. The company's market capitalization as of December 31, 2023, at approximately USD 634 million, provides a snapshot of the market's valuation of the company and is essential for assessing its size and investment appeal.
IRSA's strong performance in the real estate sector, as evidenced by the reported results, can be seen as a bellwether for the overall health of the real estate market in Argentina. Given the high occupancy rates and sales growth in malls, there appears to be a consumer confidence that is translating into retail spending. This is particularly noteworthy considering the historical economic volatility in Argentina, which includes currency fluctuations and inflationary pressures.
The premium office segment's high occupancy rate of 92.8% is indicative of a healthy demand for high-quality office spaces, potentially driven by economic growth, a growing services sector, or a trend of businesses prioritizing prime locations. This could signal a broader economic trend where companies are willing to invest in premium locations, possibly forecasting an uptick in business activities in urban centers.
Investors should note that the performance of real estate companies like IRSA can serve as a proxy for the country's economic condition and investor sentiment. The positive results may attract foreign investment, which could have a ripple effect on the broader economy. However, it is essential to contextualize these results within the broader economic environment of Argentina, which has faced challenges such as inflation and currency devaluation.
The significant gain from changes in the fair value of investment properties could reflect macroeconomic factors such as inflation or changes in the local real estate market dynamics. In an inflationary environment, real estate often acts as a hedge, with property values and rental incomes potentially increasing. This can result in higher reported gains in fair value, as seen in IRSA's financials. However, it is important to consider the real terms of these gains, as nominal increases may not equate to real wealth gains in an inflationary context.
Additionally, the company's ability to maintain high occupancy rates and grow tenant sales in a country known for its economic fluctuations could be a testament to the company's operational resilience and strategic positioning. The ability to sell additional floors in a premium office building during uncertain economic times is particularly noteworthy, as it may indicate a segment of the economy that is thriving despite broader challenges.
Investors would do well to monitor the company's debt levels and the impact of Argentina's broader economic policies on IRSA's performance. The balance sheet shows an increase in both current and non-current liabilities, which could raise concerns about the company's leverage and interest rate exposure, especially in a volatile economic environment like Argentina's. The long-term sustainability of IRSA's growth will depend on the company's ability to manage these liabilities in the face of potential economic headwinds.
HIGHLIGHTS
- The net result for the second quarter of fiscal year 2024 recorded a gain of
ARS 146,593 million compared toARS 48,072 million in the same period of the previous year, mainly explained by the gain recorded from changes in the fair value of investment properties.
- Rental adjusted EBITDA reached
ARS 54,102 million ,12.3% higher than the first half of 2023, driven by the shopping malls and hotels segments. Total adjusted EBITDA reachedARS 66,940 million , increasing54.6% compared to the same period of the previous year, mainly explained by higher sales of investment properties.
- Malls' tenant real sales grew by
8.9% in the first half of fiscal year 2024 compared to 2023 and occupancy stood at levels of98% .
- Regarding the premium office segment, we reached
92.8% occupancy this quarter and sold 2 additional floors of the "200 Della Paolera" building, in Catalinas.
- In January 2024, the process of distributing the cash dividend and treasury shares in the portfolio, approved by the Shareholders' Meeting on October 5, 2023, to GDS holders, which was pending, was concluded.
Financial Highlights
(In millions of Argentine Pesos)
6M FY 2024
Income Statement | 12/31/2023 | 12/31/2022 |
Revenues | 101,457 | 96,193 |
Consolidated Gross Profit | 68,701 | 63,561 |
Net result from changes in the fair value of investment properties | 137,822 | (91,958) |
Consolidated Profit / (Loss) from Operations | 193,279 | (54,253) |
Result for the Period | 146,593 | 48,072 |
Attributable to: | ||
IRSA's Shareholders | 141,519 | 46,992 |
Non-Controlling interest | 5,074 | 1,080 |
EPS (Basic) | 189.45 | 62.66 |
EPS (Diluted) | 189.70 | 63.93 |
Balance Sheet | 12/31/2023 | 06/30/2023 |
Current Assets | 184,846 | 145,134 |
Non-Current Assets | 1,466,348 | 1,325,529 |
Total Assets | 1,651,194 | 1,470,663 |
Current Liabilities | 164,687 | 156,491 |
Non-Current Liabilities | 648,785 | 519,781 |
Total Liabilities | 813,472 | 676,272 |
Non-Controlling Interest | 49,267 | 46,151 |
Shareholders' Equity | 837,722 | 794,391 |
The Company's market capitalization as of December 31, 2023, was approximately
IRSA Inversiones y Representaciones S.A. (NYSE: IRS, BYMA: IRSA), the
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SOURCE IRSA Inversiones y Representaciones S.A.
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