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Investing.com -- Watkin Jones shares dropped more than 12% Thursday after the residential developer posted first-half results that aligned with prior guidance but flagged the need for additional asset sales to meet full-year earnings targets.
The company reported a small positive adjusted EBIT for the six months ended March 31, consistent with earlier forecasts.
Analysts at Jefferies said the results were in line with expectations but noted that further progress is required for Watkin Jones to reach the fiscal 2025 EBIT consensus of about £6 million. That compares with £0.4 million recorded in the same period last year.
The path to that target depends on securing forward funding agreements for three assets currently on the market.
Among these, the Glasgow scheme is the most crucial, according to the brokerage. A fourth asset may be brought to market later this year.
No new Refresh contracts were disclosed in the results, though management stated that the tracked pipeline for that segment has expanded.
The update included a new planning submission for 722 beds across two schemes in the purpose-built student accommodation and co-living categories.
The company indicated that these projects are expected to be marketed in fiscal 2026, due to the typical planning timeline.
Construction is underway at the St Helens and Southwark sites, part of the two development partnerships announced earlier in the half.
The company said these and other ongoing projects are delivering in line with stated margin guidance.
Net cash rose to £73 million, up from £44 million in the prior year period. The company secured a land site in Brighton during May and reported that four additional sites are currently under offer. No interim dividend was announced, consistent with Jefferies’ estimates.
“However as with the previous update, further sales remain required in the continued ’challenging market backdrop’ to reach the FY25 consensus of c.£6m (with the FY26 consensus of c£15-20m requiring an even greater momentum),” said analysts at Jefferies.