Safestore expects to 'slightly' beat profits forecasts

The self-storage group generated sales of £28.6m in the three months to 31 July, a rise of 7.1% on the same period last year and 9.2% on a like-for-like (LFL) basis, or 6.6% LFL if excluding the effect of currency rates.

Although the third quarter is traditionally the busiest period in the year, the rate of growth slowed from the 10.4% in the first half, but for the year to date revenues have risen 10% on a LFL basis to £82.7m, though this was expected by analysts.

In the third quarter, occupancy rose to 3.69m sq feet, or 74.8% of the maximum, up from 72.2% a year ago, while the average storage rate of £25.97 is up 5% in the year to date.

"Market dynamics remain favourable," said chief executive Frederic Vecchioli, who expressed his confidence that the company can, with current trading remaining positive and the impact of the recent weakening of sterling the Parisian results after the Brexit vote, generate "cash tax adjusted earnings slightly ahead of current market expectations".

LFL sales from Paris were up 2.3% in the third quarter, down from 6.8% in the first half, with the UK gaining 7.5%, a slowing from the 11.7% rate in the previous six months.

In the period since the EU referendum, Safestore said it had seen no discernible change in trading patterns in the UK.

On 29 July, the acquisition of Space Maker was completed, while the opening of a newly redeveloped Wandsworth store in August is expected to be followed by three further stores in the UK and one in Paris in the coming weeks.

Broker Peel Hunt estimated that on an annualised basis, the current EUR/GBP rate would add around 3% to earnings, or circa 1-2% for the financial year.

Analysts noted that the current cash tax adjusted earnings consensus is at 18.9p per share and it upped its own forecast to circa 19.5p and said it expected the dividend to edge up to around 11.7p per share for a 3.1% yield.