Big Yellow Group PLC (LON:BYG) reported a slow start to the third quarter of the year after a solid first half-year, but management expects things to pick up in March.
The self-storage firm reported a 1.6% decline in space available to customers, or what company calls maximum lettable area (MLA), or 76,000 square feet, since the end of September, compared to 1.2% at the same stage last year and 1.8% two years ago.
READ: Big Yellow gets off to slower start but prospects pick up
Results for the six months to 30 September, however, were in line with expectations, with MLA up 0.7%, while both revenue and underlying store profits (EBITDA) rose 3% to £64mln and £44mln respectively. Profit before tax jumped 56% to £95mln.
"The economic and political environment is currently less than helpful, however despite this we have continued to deliver growth in revenue, cash flow and profit," said executive chairman Nicholas Vetch.
After raising £65.3mln a year ago, he said Big Yellow had made progress building the pipeline of new stores and securing planning consents, with 13 development sites totalling roughly 890,000 sq ft or 19% of current MLA.
"As we open new stores from Spring 2020, we anticipate that shareholders will see an increasing contribution in our performance from that expansive strategy."
Broker Liberum also kept a positive outlook on the company, as it deems self-storage “one of the most attractive growth industries in UK real estate” with relatively high return activity.
“Demand for self-storage more generally is clearly robust and we continue to rate the benefits of Big Yellow's established first-mover advantage and scale,” analysts said in a note.
Shares dropped 4% to 1,147.88p on Tuesday morning.