Profit at Sumitomo Forestry Australia declined after the group acquired a 51% stake in Metricon for $105 million, less than the $115 million it initially indicated. Net profit after tax fell to $12.1 million in the year to December, down from $13.5 million in the prior year, even as the acquisition lifted scale.
Revenue jumped 89% to $3.6 billion from $1.9 billion, driven by Metricon and existing brands. The business also owns national builder Henley Homes, Scott Park Group in Western Australia and Wisdom Homes in New South Wales.
Costs rose sharply as the enlarged group took on Metricon’s workforce and operations. Wage and salary expenses more than doubled, climbing to $392.5 million from $174.6 million, which ate into the higher revenue base.
Sumitomo Forestry also reassessed the value of assets acquired with Metricon’s parent company. The company wrote down $35 million in goodwill, an intangible balance that covers elements such as brand strength and customer relationships, leaving total goodwill at $37.8 million.
Investors and lenders watching Australia’s largest home builder are likely to focus on how Sumitomo Forestry manages integration costs and the value of those intangible assets. The combination of soaring revenue, heavier wage bills and goodwill write-downs shows the difficulty of turning scale into higher profit in a tough housing market.
Offshore owners in residential construction must balance aggressive expansion with disciplined capital management.
