A 20% pre-tax profit slump in the six months to 30 April fails to dampen appetite for self-storage operator Safestore (SAFE).
Shares move 1.7% higher to 348.2p as the market welcomes improving occupancy and higher pricing along with management’s expectations of a strong performance in the year to 31 October, based on an ‘encouraging’ start to the second half.
Plans to open five new stores and extend two others by the end of December are further cause for optimism. This expansion is one of the reasons behind its profit slump as management invests in growing its portfolio by 217,000 square foot in 2016.
Management’s confidence is backed up by a recommended 20% interim dividend hike to 3.6p a share from 3p a year ago.
The company, which has around 120 stores in the UK and Paris, saw revenues rise 7.3% to £54.1 million in the interim period while free-cash flow jumped 25.5% to 19.7 million.
This was thanks to occupancy improving to 70.9% from 68.9% in 12 months, while the average storage rate moved 4.7% during the same period to £26.02.
These figures and management’s confidence appear to validate the strategy implemented in 2014 to focus on marketing, occupancy and pricing.
Online awareness is a major battleground to win business in the self-storage market and management have made this key to their growth plans by upgrading the company’s website and mobile platforms while training staff to convert more enquires into sales.
