REA Group Shares Slide 0.9% as CEO Retirement Announcement and Revised Cost Guidance Weigh on Stock

3 min read | February 06, 2025 12:37 PM AEDT | By Team Kalkine Media

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Highlights

REA Group’s shares dropped 0.9% after announcing CEO Owen Wilson’s surprise retirement in 2025.

The company raised its operating cost growth forecast for FY25 to low double digits, a change that could add up to AU$20 million to its cost outlook.

REA Group’s net profit for the first half of the year was AU$314 million, missing Jarden’s forecast but exceeding consensus estimates.

Shares of REA Group (ASX:REA) fell by 0.9% to AU$249.56 on Thursday, making it one of the top losers in the benchmark ASX 200 index. The decline comes amid the company’s announcement that its CEO, Owen Wilson, will retire in the second half of 2025, alongside a revision in its cost guidance for the upcoming fiscal year.

Key Highlights:

CEO Retirement: REA Group confirmed that CEO Owen Wilson will step down in the second half of 2025, a move analysts from Jarden described as "somewhat of a surprise."
Revised Cost Guidance: The company expects low double-digit growth in its core operating costs for FY25, higher than its previous forecast of high single-digit growth. This revision could lead to an increase of AU$12 million ($7.54 million) to AU$20 million in costs.
Earnings Miss: REA Group posted a first-half net profit of AU$314 million, missing Jarden’s estimate of AU$321 million but beating a Visible Alpha consensus estimate.

CEO Retirement and Surprising Changes
REA Group's announcement regarding CEO Owen Wilson’s retirement in 2025 took many by surprise. Analysts at Jarden called the decision "somewhat of a surprise," as Wilson has been instrumental in driving the company’s success. His departure adds an element of uncertainty for investors, contributing to the downward pressure on the stock.

Increased Operating Costs for FY25
Alongside the leadership change, REA Group revised its operating cost growth forecast for FY25 to a low double-digit increase. This adjustment is higher than its previous expectation of high single-digit growth and suggests an additional cost burden of between AU$12 million ($7.54 million) and AU$20 million for the fiscal year, which could impact profitability.

Quarterly Earnings
REA Group reported a first-half net profit of AU$314 million. While this figure beat the Visible Alpha consensus estimate, it fell short of Jarden’s more optimistic projection of AU$321 million. Despite the profit miss, the company’s results were solid, with growth driven by strong performances in the property listing market.

Stock Performance
Despite the challenges, REA Group’s stock has risen by about 8% this year as of the last close.

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