City Developments' Q2 profit down 26.4%

Visitors at the sales gallery for Piermont Grand, an executive condominium developed by City Developments, last month. In the quarter ended June 30, the group recognised progressive contributions from two projects - The Tapestry and Whistler Grand -
Visitors at the sales gallery for Piermont Grand, an executive condominium developed by City Developments, last month. In the quarter ended June 30, the group recognised progressive contributions from two projects - The Tapestry and Whistler Grand - based on construction stages and sales status.PHOTO: CITY DEVELOPMENTS

Revenue falls on timing of profit recognition for property segment

Property and hotels group City Developments (CDL) yesterday 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 $220.7 million for the same period a year ago.

This translated to earnings per share of 17.2 cents for the quarter, versus 23.6 cents in the same period in the preceding year.

CDL shares closed at $9.04 yesterday, down 0.88 per cent, or 8 cents.

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

During the quarter, the group recognised progressive contributions from The Tapestry and Whistler Grand projects, based on construction stages and sales status.

The corresponding period last year was largely made up of higher profit margins from completed projects such as New Futura in Singapore, Phase 2 of Suzhou Hong Leong City Centre in China, and Park Court Aoyama The Tower in Tokyo, Japan, which were recognised in entirety for that quarter, CDL said.

The board has declared a tax-exempt special interim dividend of 6 cents per ordinary share, the same as last year. The dividend will be paid on Sept 12, with books closure 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 $1.6 billion.

  • AT A GLANCE

  • REVENUE: $850.4 million (-37.5%)

    NET PROFIT: $162.4 million (-26.4%)

Earnings per share for the half-year period came in at 39.2 cents, up from 33 cents previously.

CDL said the increase in half-year net profit was due mainly to the successful unwinding of its second Profit Participation Securities structure, as well as profit from two joint venture projects, South Beach Residences and Boulevard 88.

The group attributed the significant decrease in half-year revenue largely to the timing of its earnings recognition.

CDL executive chairman Kwek Leng Beng said trade tensions between the United States and China continue to severely dampen market sentiments globally, and that many economies - including Singapore - will be seriously affected by the escalating dispute.

Group chief executive Sherman Kwek said CDL has diversified overseas, such as through its partnership with Sincere Property, to expand the group'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," he said.

A version of this article appeared in the print edition of The Straits Times on August 09, 2019, with the headline 'City Developments' Q2 profit down 26.4%'. Print Edition | Subscribe