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Jeffrey Hutton is a Morningstar contributor.

Property developer Stockland (SGP) is betting accelerating demand for retail properties and a recovery in housing, thanks to lower interest rates for the rest of the financial year, will cushion a tough first half, helping profits level peg with results last year.

The company, which announced a share buyback last year, expects earnings per share of about 32 cents - the same as last year, said Matthew Quinn, Stockland’s managing director, on Thursday.

"Assuming current residential conditions continue, we expect full-year (earnings per share) to be the same as fiscal 2011 before accretion."

Net profit fell 28 per cent during the six months ended December to $307.6 million because of one-off losses of $85 million, as the company counted the cost of the falling value of some its financial hedges.

The company announced a distribution of 12 cents a share and said net debt as a percentage of total tangible assets was 23 per cent.

"Conditions will remain challenging with credit markets tightening, the Australian economy under pressure and tough property markets," Quinn said.

"Stockland is well capitalised with a strong balance sheet and there are good opportunities for revenue growth in the second half and beyond, particularly in our retail and residential businesses."

Profit from retail development rose 6 per cent during the first half to $152 million. Income from residential projects slumped 11 per cent because of a 74 per cent fall in super lot revenue and because some earnings couldn't be registered in time for the first-half result.

Stockland shares fell about 1.8 per cent in Sydney after it released the earnings result.

Stockland's results were lower than forecast, but some analysts say that with much of the earnings not expected until the second half, there was little reason to doubt the company's outlook.

"While the result was below our estimates, this is partly explained by the estimated first-half/second-half earnings skew," said Goldman Sachs analyst Peter Zuk.

Zuk had expected net operating profit of $367 million, compared with the company's $351 million.

"We don't expect meaningful revisions post today's result."