CDL first-half profit sinks 99.1% on Covid-19 hit; sees possible divestments of non-core hotels

CDL is progressing in its plan to rebuild Fuji Xerox Towers in the Central Business District into a 51-storey mixed-use development with offices, shops, residential and serviced apartments.PHOTO: CITY DEVELOPMENTS LIMITED

SINGAPORE – Property heavyweight City Developments Limited (CDL) saw earnings plunge in the first half-year as the prolonged Covid-19 pandemic “severely impacted” across its businesses, especially its hotel operations.

CDL group chief executive Sherman Kwek said a thorough review is ongoing for the hotels segment while keeping a close watch for signs of improvement in global travel sentiment.

The group is exploring the possible divestments of non-core hotels and China investment properties.

Net profit for the six months to end-June fell 99.1 per cent to $3.1 million, from $362 million for the same period last year, CDL said on Thursday (Aug 13).

This resulted in a first-half loss per share of 0.4 cent, after deducting preference dividends of $6.4 million, which were paid on June 30. This compares to earnings per share of 39.2 cents in the year-ago period.

Revenue for the first half-year fell 32.8 per cent to $1.07 billion, from $1.6 billion a year ago. The decline was seen across all business segments, but with hotel operations accounting for 82 per cent of the drop in revenue.

CDL executive chairman Kwek Leng Beng said the group’s hotel operations will continue to face pressures in the subsequent quarters, although its property development and investment properties segments have remained relatively resilient.

“Despite the uncertainties, we are confident that with the eventual pent-up demand for travel, the road to recovery will be accelerated, especially when a vaccine for Covid-19 is likely to be available next year,” he said.

Earnings were dragged down mainly by hotel operations posting a pre-tax loss of $208.2 million, which included $33.9 million of impairment losses made in view of the pandemic.

As at end-June, 28 per cent of the group’s 152 hotels worldwide were temporarily closed and those that remained open were operating at much lower occupancy. In constant currency, global hotel revenue per available room fell by 56.6 per cent to $60.30 from $139.10 a year ago, while global occupancy dropped to 39.4 per cent from 72.2 per cent.

CDL noted that earnings were also impacted by lower divestment gains. The corresponding period last year included a $197.2 million pre-tax gain from the unwinding of the group’s Profit Participation Securities 2 platform, with the divestment of Manulife Centre and 7 & 9 Tampines Grande. In contrast, the divestment gains for the first half of this year came to $49.9 million from the sale of Millennium Hotel Cincinnati and the disposal of a 75 per cent stake in subsidiary, Sceptre Hospitality Resources.

With the circuit breaker affecting Singapore residential sales in the first half-year, CDL said the group and joint venture associates sold 356 units totalling $514.7 million, compared with $1.6 billion in sales for the year-ago period, which also benefited from more ultra-luxury projects launched.

To date, the group’s 861-unit The Tapestry and the 716-unit Whistler Grand have sold 842 and 576 units respectively, while Amber Park has sold 211 of its 592 units, said CDL. Its joint venture 820-unit executive condominum project, Piermont Grand, and the 680-unit Sengkang Grand Residences have sold 577 and 255 units respectively, the company added.

CDL said it plans to launch in this quarter its condo project with Hong Leong Holdings, the 566-unit Penrose in Sims Drive, close to Aljunied MRT station.

For 2021, CDL plans to launch an upmarket condo comprising about 540 units in Irwell Bank Road, near the upcoming Great World MRT station, in the first half of the year. It also expects to launch some time next year the residential component of its joint venture Liang Court redevelopment, comprising around 700 units.

The group is also progressing with its plans for two mixed-use redevelopments.

It is preparing to file for provisional permission to redevelop Fuji Xerox Towers in the Central Business District into a 51-storey freehold  development, with 60 per cent for residential units and serviced apartments and 40 per cent for commercial units. Demolition-related works are slated to begin in the second half of next year.

Preliminary planning applications are currently being reviewed to redevelop Central Mall and its cluster of conservation shophouses for an integrated development with offices, shops, serviced apartments and a hotel.

CDL shares were trading up 10 cents or 1.2 per cent at $8.44 as of 2.45pm on Thursday.

“Source:[CDL first-half profit sinks 99.1% on Covid-19 hit; sees possible divestments of non-core hotels] © Singapore Press Holdings Limited. Permission required for reproduction”

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