Australian residential developer AVJennings (ASX:AVJ) is back in positive territory after offloading its loss-making contract building business.

AVJennings reported a $9.6 million profit for the year to June 30, a turnaround from a $12.7 million loss for 2008-09.

The sale of contract building to Sekisui House Australia this month will help stem the flow of losses with the division running up a $4.6 million deficit this year from $18 million last year.

Chief executive Peter Summers said the segment was obviously what dragged the company into losses last year.

''But the development segment has also improved.''

He said AVJennings had restructured its development arm to better ''responsibility and accountability''.

''As a result of that we had much better focus on work flow, a much better monitoring system and greater cost control.''

Mr Summers admitted the housing market remained volatile in the short term but the RBA's delay of interest rate hikes was reassuring.

He said broader economic concerns also weighed on potential buyers.

AVJennings will pay shareholders on the books by September 17 1.5¢ a share on September 30. The company did not pay a dividend last year.