OUE profit down 7.7% despite hefty turnover

Hotel group and developer OUE saw last year's revenue more than double, thanks to stronger contributions from its property investment and development divisions, but earnings still took a hit.
Hotel group and developer OUE saw last year's revenue more than double, thanks to stronger contributions from its property investment and development divisions, but earnings still took a hit.ST PHOTO: KUA CHEE SIONG

Higher costs and fair value losses eat into $884m revenue

Earnings took a hit at hotel group and developer OUE last year, owing to higher expenses and fair value losses on investment property.

Net profit came in at $144.4 million for the 12 months to Dec 31, down by 7.7 per cent on 2015, although revenue more than doubled to $884.2 million on stronger contributions from the property investment and development divisions.

Property investment turnover rose by 36.9 per cent to $264.7 million, from a year earlier - owing mainly to the full-year consolidation of sales from One Raffles Place, following the acquisition of an additional interest in OUB Centre in October 2015. OUB Centre was previously equity-accounted.

Most of OUE's investment properties also recorded higher turnover last year.

In the property development division, OUE Twin Peaks contributed sales of $197 million, up from $23.6 million the year before.

  • AT A GLANCE

    REVENUE: $884.2 million (+104.9%)

    NET PROFIT: $144.4 million (-7.7%)

    FINAL DIVIDEND PER SHARE: 2 cents (+100% )

OUE also recorded revenue of $205 million from the divestment of Crowne Plaza Changi Airport Extension to OUE Hospitality Real Estate Investment Trust last August.

The net gain on the divestment of Crowne Plaza Changi Airport was about $68.7 million, after taking into account development and related costs.

Turnover from the hospitality business was $201.7 million last year, a slight dip of 1.3 per cent from 2015, because of lower room sales at Mandarin Orchard Singapore.

OUE Skyspace in Los Angeles, which opened last June, also contributed $5.9 million to the top line.

Asset-enhancement work at OUE Downtown is nearing completion. Downtown Gallery and Oakwood Premier OUE Singapore, the new 268-unit serviced residences, are expected to open next quarter.

Earnings per share for the year was 15.99 cents, down from 17.23 cents in 2015, while net asset value was $4.45 per share last year, up from $4.35 per share in 2015.

A final cash dividend of two cents per share has been proposed, which would bring the total cash dividend for the year to five cents per share.

Executive chairman Stephen Riady said: "In view of the subdued global and local economic conditions, we are satisfied with the group's performance in 2016.

"We continue to enjoy recurring income growth from our well-diversified portfolio of prime assets."

The counter closed up half a cent, or 0.26 per cent, to $1.95, before earnings were announced.

A version of this article appeared in the print edition of The Straits Times on February 18, 2017, with the headline 'OUE profit down 7.7% despite hefty turnover'. Print Edition | Subscribe