Property giant CapitaLand expects its financial performance for the current financial year to be materially adversely impacted, despite seeing signs of recovery in operating metrics for the third quarter.
The group said in a business update on Tuesday evening that this follows the "significantly reduced" profits in the first half of this year arising from a subdued operating environment, lower-than-expected capital recycling, year-end revaluations of the group's investment portfolio, and impairment assessment for equity investments.
Separately, the company announced the retirement of chairman Ng Kee Choe, who has been on its board since April 2010. He will step down at the conclusion of its next annual general meeting scheduled for April next year, and will be succeeded by Mr Miguel Ko, deputy chairman of the group.
CapitaLand said it still expects to deliver positive cash profits for FY2020 from its diversified operating income streams, adding that its financial position "remains resilient".
It previously reported an 89 per cent year-on-year drop in net profit to $96.6 million for the fiscal first-half ended June.
There were encouraging signs of recovery in the third quarter as the Covid-19 situation improved globally, with operating metrics improving on a quarterly basis, noted the group, especially in the residential, retail and lodging segments.
These segments were hit hardest by Covid-19 mitigation measures earlier this year, when residential sales offices were forced to close, non-essential retail trades were unable to operate, and occupancy of lodging assets was reduced due to travel restrictions.
CapitaLand said that in the residential segment, unit handovers were back on track in China and Vietnam. The group sold over 1,900 units in China during the third quarter, 40 per cent higher than in the previous quarter.
Unit handovers in China for the nine months ended September exceeded the prior year period in total value, while its Vietnam business saw a year-on-year trebling in both units and handover value.
For the Singapore residential market, CapitaLand sold three times the number of units during the third quarter, compared with the total sold in the first half of this year. Some 131 units worth $201 million were sold in the first nine months of the year.
The retail segment saw shopper traffic and tenant sales narrow the gap to pre-Covid-19 levels for the nine months.
CapitaLand said the committed occupancy rate remained largely stable and almost all tenants have resumed operations.
Tenant retention rate also remained high for its Singapore portfolio, at more than 80 per cent. The group has disbursed over $320 million in rental rebates to tenants for the nine months.
For the lodging segment, CapitaLand said there was optimism with increasing resumption of domestic travel, adding that its asset-light operating platform maintained positive cash flow for the nine months.
Around 96 per cent of its lodging properties were operational as at the end of the quarter, with occupancy rising to around 50 per cent during the quarter, up from about 40 per cent in the prior period.
CapitaLand said that while there has been progress in the third quarter, overall business and consumer sentiment remains cautious, given the uneven pace of recovery and concerns over a resurgence in the pandemic.
For FY2021, CapitaLand expects the pace of the global economic recovery to remain highly dependent on factors such as a reliable Covid-19 vaccine, the resumption of normal international travel and the easing of geopolitical tensions.
"Until then, financial returns expectations based on pre-Covid assumptions may also have to be moderated," it said.
CapitaLand shares, which hit an eight-year low on Monday, fell 0.39 per cent yesterday to close at $2.56.
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