REA Group on up as Domain hits
shaky ground
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THE AUSTRALIAN BUSINESS REVIEW - 12:00AM NOVEMBER 9, 2016
Hamish McLennan and Tracey Fellows at yesterday’s REA Group annual meeting in Melbourne
yesterday. Picture: Stuart McEvoy
REA Group chief executive Tracey Fellows has suggested rival Domain’s
problems are largely company-specific after she unveiled a solid set of
results despite property listing volume declines in the Sydney and Melbourne
markets.
Revenues at REA Group, which owns realestate.com.au, increased 16 per
cent to $170 million in the three months to September 30 compared with the
prior period. Pre-tax earnings rose 9 per cent to $90m.
The update was given to investors at the company’s annual meeting
yesterday.
That performance compares to Domain, whose owner Fairfax Media last
week blamed the prospect of softer listings and a first-half earnings decline
as a hangover from the marathon federal election campaign that continues to
linger.
At Domain, new listings volumes to the end of October were down by 18 per
cent and 5 per cent in Sydney and Melbourne, respectively. But REA’s
Australian residential revenues climbed 14 per cent even though new listings
for sales of homes fell back 8 per cent year-on-year in the July to September
quarter, according to CoreLogic.
“In tough market conditions, you see quality shine through,” Ms Fellows
told The Australian.
“There’s no smoke and mirrors or secrets here, we’re extremely transparent.
“The fact that we’ve been able to grow our residential business shows that
the underlying strength and health of our business is very strong.”
Results were also boosted by the inclusion of income at Southeast Asiafocused portal iProperty. Shares in REA climbed 5.3 per cent to $51.09, as
the wider sharemarket rose slightly.
REA is bucking the trend in local residential listings by driving higher sales
of premium advertising packages, Ms Fellows said, as the company’s efforts
to migrate more customers to the top tier while also increasing market
penetration, particularly in regional areas, gathered momentum.
“We’ve shown a good level of resilience. That comes down to your teams
going out and showing customers the value of what we can deliver,” she said.
REA chairman Hamish McLennan, who has steered the company for the past
4½ years, said: “We continue to be on strategy, on message and consistent.
Tracey and the team are doing a great job.”
A continued focus on differentiating itself from competitors by providing a
better customer experience was paying off, Ms Fellows said, noting how
REA used digital technologies to offer an increasing array of services around
its products as the best means of engaging with customers.
REA’s main portal, realestate.com.au, attracted an average of 2.3 times more
monthly visits to the site than Domain, according to Nielsen Online Market
Intelligence data for the three months to September 30.
Visitors to the site also spent 7.5 times more time on the platform than rival
property sites. For advertisers, the higher a site’s audience is engaged, the
more valuable it becomes. REA is 62 per cent-owned by News Corp,
publisher of The Australian.