The yearly forecasts were new. At its half-year earnings announcement in February, ASX-listed Lifestyle Communities forecast 1100-1300 new settlements over the three years to 2024 and between 450 and 550 DMF sales – figures it repeated on Tuesday.
Mr Kelly said supply chain problems of soaring materials costs and labour shortages had not affected the company, which worked with just one builder, Todd Devine Homes, and gave it certainty by telling it before the start of each year how many homes it would build.
“He knows how many buildings he will be ordering,” Mr Kelly said. “He’s able to get the volume, talk to suppliers and get preferential treatment and guarantees.”
But the company pays for that certainty with cost-plus terms under which it guarantees to cover the cost of materials and pay the builder a fixed percentage margin on top. It also pays suppliers on seven-day terms.
“We can pass on cost increases through our sale prices,” Mr Kelly said. He did not say how much the company had increased prices this year.
Materials and labour shortages, along with heavy rain across the east coast of Australia have prompted companies including Lifestyle Communities’ rival, Ingenia Communities, to scale back forecasts for the year.
“You’ve seen other companies come out with downgrades,” Mr Kelly said.
“We’re the only one who’s coming out and exceeding expectations. We said we do what we would do and do it well, but there’s a lot of thought that’s gone into how we manage supply.”
Shares in Lifestyle Communities closed 24¢ lower yesterday, or 2 per cent, at $12.07.
