City Developments’ Q2 profit falls 26% to $162.4m

SINGAPORE – Property and hotels group City Developments Limited (CDL) on Thursday (Aug 8) posted a 26.4 per cent drop in group net profit to $162.4 million for its fiscal second-quarter ended June 30, down from a restated net profit of S$220.7 million for the year-ago period.

This translated to earnings per share (EPS) of 17.2 cents for the quarter, versus 23.6 cents in the preceding year.

CDL shares closed at $9.12 on Wednesday, up 0.7 per cent, or six cents, before the release of its financial results.

Revenue slipped 37.5 per cent to $850.4 million, down from a restated revenue of $1.36 billion last year, mainly due to the timing of profit recognition for its property development segment, the company said.

For Q2 2019, the group recognised progressive contributions from The Tapestry and Whistler Grand based on their stages of construction and sales status, whereas Q2 2018 was largely made up of higher profit margins from completed projects such as New Futura, Phase 2 of Suzhou Hong Leong City Center (HLCC) and Park Court Aoyama The Tower in Tokyo, which was recognised in entirety for that quarter, CDL said.

The board has declared a tax-exempt special interim dividend of six cents per ordinary share, the same as last year.

The dividend will be paid on Sept 12, with books closure date set for 5pm on Aug 26, CDL said.

For the six months ended June 30, net profit rose 18.3 per cent to $362 million, even as revenue plunged 34 per cent to $1.60 billion.

EPS for the half-year period came in at 39.2 cents, down from 33 cents previously.

“The increase in net profit was underpinned by the successful unwinding of the group’s second Profit Participation Securities (PPS 2) structure, which achieved pre-tax deferred gains totalling $153.9 million from the divestment of Manulife Centre and 7 & 9 Tampines Grande, and a gain of $43.3 million from the group’s stake in PPS 2,” CDL explained.

Profit from two joint venture projects, South Beach Residences and Boulevard 88, also contributed to the positive results, the company said.

Meanwhile, CDL attributed the significant decrease in half-year revenue largely to the timing of recognition of its earnings.

Kwek Leng Beng, executive chairman of CDL, said: “US-China trade tensions continue to severely dampen market sentiments globally. Until a deal is struck between the world’s two largest economies, global markets will continue to succumb to trade jitters. Many economies, including Singapore, will be seriously affected by the escalating dispute. Agility, discipline and experience are critical attributes that will enable the group to navigate through these persistent headwinds intoday’s dynamic, disruptive and unpredictable landscape.”

Sherman Kwek, group CEO of CDL said: “By creating strong value propositions and timing our launches strategically, we have achieved healthy sales for our residential projects in Singapore. At the same time, we have further diversified overseas through transformational initiatives such as our partnership with Sincere to expand CDL’s presence in China and achieve sustainable growth there.

“Increasing recurring income via acquisitions, asset enhancement initiatives and our fund management strategy is another priority. We will continue to grow, diversify, innovate, transform as well as forge new alliances.”

“Source:[City Developments’ Q2 profit falls 26% to $162.4m] © Singapore Press Holdings Limited. Permission required for reproduction”

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