Safestore profits drop despite revenue growth, shares fall

Self-storage company Safestore Holdings (LSE: SAFE) reported a 58% drop in pretax profit for the financial year ending October 31st, 2023, despite growing revenue. The UK-based company earned £207.8 million in pretax profit, down from £498.8 million the prior year. However, revenue rose 5.5% to £224.2 million.

Safestore attributed the profit decline to a reduced £93.8 million gain on investment properties, compared to £381.6 million the previous year. This resulted in a 55% drop in operating profit to £230.4 million. The company also reported 5.3% growth in underlying EBITDA to £142.2 million.

The results come despite what Safestore called “significant strategic and operational progress” during 2023. This included expanding its development pipeline to 30 projects, entering the German market, and adding over 500,000 square feet of new storage capacity.

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Going forward, Safestore believes its “highly resilient business model” leaves it well-positioned to withstand economic pressures. However, it expects near-term dilution from its development pipeline before longer-term accretion.

Safestore shares dropped 5.4% to 804.00p on the results. The stock is down nearly 20% over the past year despite the company’s continued top-line growth.