CapitaLand Q2 profit falls 4.2% on one-off costs from Ascendas-Singbridge acquisition

 CapitaLand's Funan mall reopened its doors to shoppers on June 28, 2019, after three years of redevelopment.
CapitaLand's Funan mall reopened its doors to shoppers on June 28, 2019, after three years of redevelopment.PHOTO: CAPITALAND

SINGAPORE - Property heavyweight CapitaLand on Wednesday morning (Aug 7) posted a 4.2 per cent drop in net profit to $579.8 million for its second quarter, from $605.5 million a year ago.

This was mainly attributed to one-off transactions costs incurred on the acquisition of Ascendas-Singbridge, which was completed on June 28. Ascendas-Singbridge is expected to start contributing to the group's profit or loss from Q3 2019 onwards.

Excluding these costs, net profit for the three months to June 30 would have increased 1.7 per cent, on higher gains from asset recycling and revaluation gains on the group's investment properties, offset by lower contribution from residential projects.

Earnings per share (EPS) for the quarter was 13.9 cents, down from 14.4 cents for the year-ago period.

Revenue slumped 19.3 per cent to $1.08 billion for the quarter from $1.34 billion a year ago, mainly due to lower residential sales in Singapore and lower handover from residential projects held through subsidiaries in China.

This was partially mitigated by higher rental revenue from the portfolio of properties in the US and Europe acquired in 2018. Revenue from investment properties grew 9.5 per cent year on year to $927.9 million during the quarter.

The residential projects which contributed to Q2 revenue were Lakeside in China; The Interlace, Sky Habitat and Marine Blue in Singapore; as well as D1MENSION and Mulberry Lane in Vietnam.

Together, the core markets of Singapore and China made up 62.8 per cent of the group's revenue for the quarter, down from 75.8 per cent a year ago.

No dividend was declared for the second quarter, same as a year ago, because CapitaLand pays the first and final dividend only.

For the half year to June 30, net profit fell 5.3 per cent year on year to $875.4 million, while revenue tumbled 21.6 per cent to $2.13 billion mainly due to lower contributions from residential projects in Singapore and China.

EPS for the six months was 21 cents, down from 21.9 cents for the year-ago period.

Lee Chee Koon, group chief executive of CapitaLand, said: "Year to date, the group has successfully unlocked capital through divestments valued at $3.4 billion, exceeding our annual asset recycling target of $3 billion. This was achieved by divesting assets that are non-core to our business and recycling quality assets into CapitaLand-sponsored Reits (real estate investment trusts), business trusts and funds to tap recurring yield."

"We remain disciplined in redeploying capital into yield-enhancing assets and new growth opportunities in developed and emerging markets to deliver sustainable growth to our investors," Mr Lee added.

Through its newly acquired business parks, logistics and industrial assets, CapitaLand is expected to benefit from new economy trends such as the growth in e-commerce, urbanisation and knowledge economies, the group said in a media statement on Wednesday.

Shares of CapitaLand closed up two cents or 0.578 per cent to $3.48 on Tuesday.