Finbar’s profit surge points to a bigger Perth apartment cycle

Profit rises despite lower revenue

Finbar Group Limited (ASX:FRI) has turned a quieter revenue year into its strongest profit result in more than a decade, reporting FY2026 net profit after tax of $20.3 million. That was a 40.9% increase on the prior year and the company’s strongest reported profit since FY2015, while underlying NPAT, excluding annual property valuation movements, rose 36.5% to $22.1 million.

Revenue fell 28.2% to $204.3 million as project completion and settlement timing shifted between reporting periods. The more revealing measure was gross profit, which climbed 19.8% to $41.2 million, lifting the gross margin to 20.2% from 12.1%. Finbar attributed the result to the timing and mix of project settlements, disciplined cost management and a 27% reduction in administration costs.

Record pre-sales build FY27 visibility

The forward order book did much of the heavy lifting in the investment case. Pre-sales reached a record $567.2 million at 30 June 2026, while settlements totalled $263.7 million across 287 lots. Average off-the-plan sales were $29.1 million a month across 35 lots, giving Finbar a substantial pool of contracted demand to convert as projects move through construction.

Bel-Air Apartments in Belmont was completed during the year and sold out ahead of completion, the first Finbar development in more than a decade to reach that milestone. Garden Towers in East Perth was 80% pre-sold and targeted for completion in the first half of FY2027; Riverbank Residences was 97% sold, Palmyra West 85% sold and Romeo Applecross 64% sold at the reporting date.

Balance sheet gives pipeline room

Finbar ended the year with $50.7 million in cash, up $14.3 million, while net debt fell by $36.4 million. Interest-bearing debt stood at $13.5 million, compared with $50.3 million a year earlier, and the reported debt-to-capital ratio declined to 3% from 18%.

The stronger balance sheet supported a larger development program. Finbar put its five-year pipeline at approximately $1.95 billion across more than 1,900 lots, including $515.1 million of projects already under construction. Around 70% of the pipeline by estimated end value is wholly owned, according to the chair’s report, although the company said joint ventures would remain useful for larger projects where capital sharing and risk allocation are attractive.

Dividends rebound as construction advances

The board declared a fully franked final dividend of 3 cents per share, taking FY2026 dividends to 5.5 cents per share from 2 cents in FY2025. The final payment is proposed for 25 September 2026, while the dividend reinvestment plan has been suspended until further notice.

FY2027’s immediate test is execution rather than ambition. Garden Towers is approaching completion, Riverbank and Palmyra West remain in construction, and Romeo moved into construction in September 2026. Parkside Residences and Leeder Residences are intended to progress towards market launch in the first half of FY2027, while the longer-dated Lyall Street, Bowman Street, Ascot and ABC Heritage opportunities are still exposed to approvals, funding, demand and construction conditions.

Valuation and delivery risks remain material

The annual report identifies construction costs, funding access, interest rates, property valuations and market demand as key risks. The company recorded a $4.37 million reduction in investment property values during the year, partly reflecting higher vacancy at Fairlanes, although the revaluation of Pelago residential assets provided a $2.33 million increase in assets held for sale. KPMG also treated inventory valuation as a key audit matter because selling prices and forecast completion costs require significant judgement.

Perth’s housing undersupply and population growth provide a favourable setting for Finbar’s mid-market apartment strategy, but the pipeline’s headline value is not the same as secured earnings. The next evidence will come from settlements at Garden Towers and completed stock, construction costs on the three active projects, and whether the next wave of launches can maintain sales momentum without stretching capital.