Safestore beats FY forecasts but shares fall on cautious outlook

Shares in Safestore declined on Wednesday despite the self-storage space provider appearing to beat market expectations with its annual results, as it pointed to a softening of conditions in the UK in the new financial year.

The company, which is Europe's second-largest self-storage group with operations across the UK, France, the Netherlands, Belgium and Spain, said group revenues were up 5.5% in the 12 months to 31 October at £224m.

A 5.1% increase in maximum lettable area to 8.09m square foot was able to offset a fall in closing occupancy to 77% from 82.1% the previous year.

"Resilient performances in the UK and Paris were complemented by new store driven growth in Spain and the annualisation of our ownership of the Netherlands and Belgium businesses," the company said.

Underlying EBITDA rose 5.3% to £142m, while adjusted diluted earnings per share were more or less unchanged on the previous year at 47.9p, slightly ahead of Peel Hunt's forecasts of 47.4p.

However, the statutory operating profit more than halved to £230.4m, down from £514.5m previously, as a result of gains on investment properties falling to just £93.8m from £381.6m.

Meanwhile, the dividend was increased by 1% to 30.1p which it said was in line with its progressive payout policy.

Looking ahead, the company reported a 0.6% LFL revenue decline for the first two months of the new financial year, with "modest" falls in the UK. It also said that "limited" promotional activity results in an improvement in LFL occupancy in the UK and Paris.

"The immediate impact on rates is expected to gradually reduce over the next few months, particularly as the group will annualise the discounting activity that took place later last year in spring," it said.

Commenting on the outlook statement, analysts at Peel Hunt said that there were downside risks to their forecasts. "Depending on how the rest of the year pans out, our 2024E EPS forecast of 46.7p may prove too optimistic; and removing all LFL growth this year would reduce our estimate by c.4% to c.45p," they said in a research note.

The stock was down 4.2% at 814.5p.