REA Group’s profit fell in 1HY23, but it wasn’t all the wrath of the property market?

Nick Sundich, February 10, 2023

Not even $16bn REA Group (ASX:REA) can escape the slump in the property market. The company reported its 1HY23 results this morning and saw a 9% drop in residential listings. But was it all the property market?

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REA records 5% higher revenues

REA recorded $617m in revenue, a figure that was actually 5% higher than the prior corresponding period. This was underpinned by yield growth in the company’s advertising products in Australia and India.

Residential listings were down 9% nationwide and down 17% in Sydney. But the company claimed that customers were relying on its premium products to maximise the impact of their campaign.

But a 9% decline in NPAT

On the flip side, a sharp rise in operating costs led to a 9% decline in NPAT to $205m. EBITDA fell as well – by 2% to $359m.

REA blamed higher marketing, employee and travel costs, but also noted that cost growth reflected reduced costs from the prior corresponding period due to lockdowns.

When will things recover?

REA CEO Owen Wilson said that activity in the property market would pick up when interest rates stabilised. He wouldn’t put a specific timeframe on this, noting that the uncertainty caused by rising interest rates would likely continue in the coming months.

All things considered, it could have been a lot worse for REA shareholders. The stock is only slightly down this morning.