Citycon Oyj - Interim report (Q1 and Q3)

Citycon Oyj’s Interim Report for 1 January-31 March 2015

Citycon Oyj Stock Exchange Release 30 April 2015 at 09:00 hrs

Citycon Q1: Solid start to the year


JANUARY-MARCH 2015
- Turnover decreased to EUR 60.1 million (Q1/2014: EUR 61.3 million) mainly due
to divestments and the weaker Swedish krona that further impacted net rental
income which came to EUR 39.8 million (EUR 40.1 million). 
-Net rental income of like-for-like properties increased by EUR 0.8 million, or
2.4%, excluding the impact of the weaker Swedish krona. The growth was
especially driven by the Swedish business unit. 
- EPRA Earnings increased by EUR 5.6 million, or 26.0% mainly due to
substantially lower direct net financing expenses. EPRA Earnings per share
(basic) was EUR 0.046 (EUR 0.049). 
- Earnings per share was EUR 0.05 (EUR 0.06). The reduction was mainly a result
of lower net fair value gains of investment properties and higher average
number of shares following the share issuances in June-July 2014. On the
contrary, net financial expenses were lower by EUR 4.5 million or 32.9% mainly
thanks to a lower amount of debt, the weaker Swedish krona and a lower average
interest rate. 

Key figures

IFRS based key figures                          Q1/2015  Q1/2014    %1)     2014
--------------------------------------------------------------------------------
Turnover                                  MEUR     60.1     61.3   -2.0    245.3
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Net rental income                         MEUR     39.8     40.1   -0.7    169.4
--------------------------------------------------------------------------------
Profit/loss attributable to parent        MEUR     27.0     28.6   -5.8     84.5
 company shareholders                                                           
--------------------------------------------------------------------------------
Earnings per share (basic)                EUR      0.05     0.06  -29.7     0.16
--------------------------------------------------------------------------------
Net cash from operating activities per    EUR      0.05     0.06  -27.9     0.13
 share                                                                          
--------------------------------------------------------------------------------
Fair value of investment properties       MEUR  2,801.7  2,744.3    2.1  2,769.1
--------------------------------------------------------------------------------
Loan to Value (LTV)                       %        40.8     50.3      -     38.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EPRA based key figures                          Q1/2015  Q1/2014    %1)     2014
--------------------------------------------------------------------------------
EPRA Operating profit                     MEUR     34.9     35.5   -1.7    149.8
--------------------------------------------------------------------------------
EPRA Earnings                             MEUR     27.2     21.6   26.0     99.7
--------------------------------------------------------------------------------
EPRA Earnings per share (basic)           EUR     0.046    0.049   -6.0    0.191
--------------------------------------------------------------------------------
EPRA NAV per share                        EUR      2.92     3.04   -4.0     3.01
--------------------------------------------------------------------------------

1) % is calculated from exact figures and refers to the change between 2015 and
2014. 


CEO, MARCEL KOKKEEL:
‘Citycon had a solid start to the year with positive like-for-like net rental
income growth of 2.4%, stable valuations and continued strong occupancy. The
Swedish portfolio showed a strong performance, while the challenging retail
market in Finland continued. The short-term impact of ongoing (re)developments
and disposals of non-core assets also weigh on Finnish turnover this year. 

Following last year's substantial financing arrangements, Citycon's average
cost of debt is at an historically low level. For the first quarter, we were
able to deliver an EPRA Earnings per share close to last year's level, which we
consider to be a good result given the considerably stronger balance sheet and
increased number of shares. 

For 2015, we expect market conditions to remain challenging in Finland, but
with a strong portfolio of daily shopping in urban locations and a continued
focus on operating efficiencies we believe that we can continue to produce a
solid set of results. We leave the guidance for 2015 unchanged.' 


BUSINESS ENVIRONMENT
The economic outlook in Citycon's operating countries remained relatively
unchanged during the first quarter of 2015. The macroeconomic environment in
Sweden, Estonia and Denmark remained strong, while market conditions continued
to be weak in Finland. 

In 2015, the European Commission forecasts Euro area GDP growth to reach 1.3%,
with Sweden (2.3%), Estonia (2.3%) and Denmark (1.7%) showing stronger growth
figures. The GDP growth for Finland (0.8%) is expected to remain modest for a
fourth year in a row and is dependent on both the recovery of the country's
export markets as well as domestic demand. 

During the reporting period, consumer confidence levels have stayed relatively
stable in Citycon's operating countries. The consumer confidence levels in the
Nordics remain positive, while the consumer confidence in Estonia is slightly
negative. In general, the Euro area still struggles with negative consumer
confidence. During the quarter, consumer prices increased modestly in Sweden
and Denmark, while Finland, Estonia and the Euro area showed slightly negative
inflation. (Sources: Statistics Finland/Sweden/Estonia/Denmark) The
unemployment rates are substantially below the Euro area average (11.3%) in all
Citycon's operating countries. (Source: Eurostat) 

Retail sales growth for the first two months of 2015 has been strong in Estonia
(8.0%) and Sweden (4.8%), positive in Denmark (0.8%) and negative in Finland
(-1.6%). (Sources: Statistics Finland/Sweden/Estonia/Denmark) Prime shopping
centre rents in Finland remained stable compared to the previous quarter, but
decreased slightly year-on-year. In Sweden, year-on-year prime shopping centre
rents increased by 2-3%. In Estonia, prime shopping centre rents remained
stable in Q1. In Finland, the weak outlook for retail sales limits the rental
growth potential going forward and prime rents are expected to remain
unchanged. In Estonia, rental growth is expected to remain marginal and occur
mainly due to indexation. In Sweden, prime rents are forecasted to increase by
approximately 2% in 2015 and are expected to perform better than secondary
retail rents in terms of growth. (Source: JLL) 

In Finland, the first quarter of 2015 continued the increased activity seen on
the investment market in 2014. The demand for core assets remains strong and
prime shopping centre yields have remained stable. Finnish prime yields are
forecasted to stay stable during 2015, while a slight compression is expected
for Estonian prime yields due to the shortage of investment grade properties
and a more active market environment. The transaction volume of Swedish retail
property was around SEK 6.3 billion during the quarter. Prime shopping centre
yields have moved in during the last 6 months given strong demand and low
supply, as well as continued low interest rates. (Source: JLL) 


OUTLOOK
In 2015, Citycon expects its EPRA Operating profit to change by EUR -8 to 0
million and its EPRA Earnings to change by EUR 6 to 14 million from the
previous year. The company forecasts an EPRA EPS (basic) of EUR 0.175-0.195. 

These estimates are based on the existing property portfolio as well as on the
prevailing level of inflation, the euro-krona exchange rate, and current
interest rates. Premises taken offline for planned or ongoing (re)development
projects reduce net rental income during the year. 



Helsinki, 29 April 2015
Citycon Oyj
Board of Directors


For further information please contact:
Marcel Kokkeel
CEO
Tel. +358 20 766 4521 or +358 40 154 6760
marcel.kokkeel@citycon.com


Eero Sihvonen
CFO, Executive Vice President
Tel. +358 20 766 4459 or +358 50 557 9137
eero.sihvonen@citycon.com



Citycon is an owner, developer and manager of urban grocery-anchored shopping
centres in the Nordic and Baltic region, managing assets that total
approximately EUR 3.4 billion and with market capitalisation of EUR 1.8
billion. Citycon is the No. 1 shopping centre owner in Finland and Estonia and
among the market leaders in Sweden. Citycon has also established a foothold in
Denmark. 

Citycon has investment-grade credit ratings from Standard & Poor's (BBB) and
Moody's (Baa2). Citycon Oyj's share is listed in NASDAQ Helsinki.

Viðhengi:

Citycon_Interim_Report_Q1_2015.pdf