Big Yellow full-year revenue, earnings rise

The FTSE 250 self-storage operator said its revenue rose 6% to £199.6m, driven primarily by a 7.5% increase in average achieved rents per square foot.

Store revenue rose 6% to £197.1m, with like-for-like store revenue up 4%.

Despite a 2.3 percentage point decline in like-for-like occupancy to 80.9%, the overall store EBITDA margin increased to 72.5%, up from 71.8% in the prior year.

Adjusted profit before tax rose 1% to £107.3m, while adjusted earnings per share fell by 1% to 55.9p.

Statutory profit before tax surged to £241m - a significant increase from £75.3m in the prior year, largely due to a revaluation gain of £131.2m.

Statutory cash flow from operating activities increased 1% to £110.1m, as the board maintained a full-year dividend of 45.2p per share, consistent with the prior year.

Big Yellow continued its investment in new capacity, raising £107m through a share placing to fund its development pipeline during the period.

The firm opened a new store and an extension at Kings Cross, adding 127,000 square feet of space.

It also committed to building seven additional stores, expected to open by summer 2026, and acquired freehold properties in Leicester and Leamington Spa, increasing its development pipeline to 12 sites.

The company secured planning consent for new stores in Wapping and Epsom, bringing the total number of pipeline stores with planning approval to eight out of 14.

Additionally, Big Yellow invested £6m in solar retrofitting, increasing its solar capacity by 47% to 6.6 megawatts across 68 stores.

“The transition to higher interest rates has had the impact intended by policymakers of subduing activity and Big Yellow has not been immune, although it has again proved itself to be resilient with a healthy revenue increase and EBITDA growth of 7%,” said executive chairman Nicholas Vetch.

“The driver of this performance has been an increase in net rents, partially offset by a decline in occupancy.

“As usual, we caution that we have limited visibility beyond a few weeks, but the period since the year end has seen an encouraging pick-up in occupancy growth, closing the gap with the prior year like-for-like occupancy to 0.7 percentage points, and we expect occupancy to continue to grow into our seasonally stronger summer trading period.”

Vetch said the increase in revenue and EBITDA did not translate into a commensurate growth in earnings, as the firm absorbed a significant increase in interest expense, but the board believed the impact was now behind, and could turn from a headwind to a tailwind.

“The successful placing last October has given us the balance sheet strength to commit to building out our pipeline.

“We now have an opportunity to generate in excess of £50m of net operating income from a combination of delivering the income from our pipeline stores and leasing up the existing fully built 1.4 million square feet of vacant space to previously achieved levels of occupancy, the majority of which would flow through to earnings.

“We are entirely cognisant that delivering this growth will take time and is to some degree subject to external forces, but we believe that it is achievable and will be our predominant focus over the next few years.”

Shares in Big Yellow Group closed down 0.34% on Monday, before the results were released.

Reporting by Josh White for Sharecast.com.