Overseas Union Enterprise posts 70% drop in first-quarter net profit

Property developer Overseas Union Enterprise (OUE) said its first-quarter net profit fell 70 per cent from the same period a year ago to $4.9 million, due to higher expenses.

Revenue, however, rose 8 per cent to $105.4 million, driven by healthy sales made by its property development division.

In tandem with an increase in corporate development activities, administrative expenses increased from $8.6 million in the first quarter of last year to $14 million in the first three months of this year, OUE said.

These administrative expenses include insurance, legal costs, other professional fees and hotel corporate expenses.

Finance expenses also rose, from $18.6 million in the first quarter of last year to $33.5 million this year, due to higher interest costs resulting from more borrowings and an exchange loss on a US dollar-Singdollar currency swap.

OUE had taken out the US dollar loan to fund its attempted takeover of Fraser & Neave - a tussle it lost to Thai billionaire Charoen Sirivadhanabhakdi.

With the recent property cooling measures, the market environment for high-end residential property remains challenging, OUE said.

"The group will continue to drive the sale of its development project, Twin Peaks, a residential development property at Leonie Hill."

It added that itwill continue to focus on active lease management to generate returns from its office and retail properties, and that a projected increase in visitor arrivals in 2013will likely benefit its hospitality business in Singapore.