Australia's Domain steady in slipping property market

[SYDNEY] Property classifieds website operator Domain Holdings Australia Ltd reported a rise in revenue in its first months as a standalone company, reassuring investors as the country's red-hot real estate market comes off the boil.

Domain was the most profitable division of Australia's oldest media company, newspaper publisher Fairfax Media Ltd , when it was spun off in November, having shifted online more successfully than Fairfax's news business.

But it hit the stock market boards right when booming property markets in Sydney and Melbourne slipped in to reverse, as tightened investment lending rules and higher taxes on foreign buyers ended seemingly inexorable rises in sale prices.

The company, which runs the second-largest property classified website behind News Corp's REA Group Ltd , stuck to its pre-listing trajectory and posted a 12.5 per cent rise in revenue, which was A$183.3 million (S$190.3 million) for the six months to Dec 24.

Its shares rose 4 per cent to A$2.98, as the broader market added 0.5 per cent.

"It is more or less in line with expectations and it should have been," said Paul Xiradis, chief executive officer of Ausbil Investment Management, Fairfax's largest shareholder and an owner of Domain stock.

He said a downturn in the property market could prompt vendors to run longer campaigns, spending more on advertising and offsetting a fall in listing volumes.

The company expects listings to be "flat to potentially a small decline" in the second half of the year in Sydney and Melbourne, Domain's Chief Sales Officer Tom Ainsworth said on a conference call to investors.

On a statutory basis for the six months to Dec 24, Domain reported a loss of A$3.4 million as it rented new office space, recruited more staff and booked restructuring costs associated with separating from Fairfax.

Expenses for the half-year rose to A$105.1 million from A$37.6 million a year earlier, with staff costs more than doubling to A$33 million, the company said. Chief Financial Officer Robert Doyle explained the rate will moderate in the second half.

Domain's acting CEO, Nick Falloon, who also chairs both Domain and Fairfax, said some "truly impressive" candidates had applied for the permanent position vacant since Antony Catalano abruptly quit in December.

He gave no timeline on the recruitment process.

Domain declared an interim dividend of 4 cents per share.

REUTERS