SINGAPORE - Mainboard-listed Global Logistic Properties (GLP) announced a 27.4 per cent jump to US$114 million in net profit for the second quarter ended Sept 30 from US$89.47 million for the year-ago period.
The provider of modern logistics facilities said its results were driven by growth in China, development gains in Japan, GLP's entry into the US market and the absence of foreign exchange losses compared to the previous year. Its Japan earnings were up 44 per cent on the back of higher development gains. China earnings excluding revaluations were up 27 per cent year-on-year.
Revenue decreased by 1.9 per cent to US$189.3 million during the quarter. This was mainly due to the GLP Brazil Income Partners II portfolio being 100 per cent consolidated in the prior period and subsequently syndicated to 40 per cent equity interests, the sale of 9 properties in September 2014 and 5 properties in September 2015 in Japan to GLP J-REIT and the weakening of the Japanese yen against the US dollar.
This was partially offset by the completion and stabilisation of development projects in China with increasing rents and inclusion of management fee income from GLP US Income Partners I.
The group's share of results of joint ventures increased by 76.9 per cent to US$34.3 million from US$19.4 million. The increase was mainly due to the inclusion of GLP US Income Partners I, completions of development activities of certain logistics facilities in Japan and gains in its share of fair value from investment properties (net of income tax) from China, Japan and US joint ventures.
The group said it ontinues to see sustained demand for its modern logistics facilities against a backdrop of macroeconomic uncertainties. New and expansion leases totaled 1.8 million square meters in the second quarter, up 51 per cent year-on-year. The average lease ratio stood at 93 per cent as of Sept 30, up from 92 per cent in the last quarter.
It added that some customers in China have been feeling downward pressure on their profit margins. As a result, we have seen customer turnover increase. Despite the lower retention ratio we were able to increase our lease ratio by 1 per cent to 89 per cent given 1.0 million of new and expansion leases in China, up 29 per cent year-over-year.
Said GLP CEO Ming Z Mei: "Our confidence in our China business is underpinned by long-term, structural trends in domestic consumption and the country's need to replace obsolete logistics facilities. Demand for our facilities is primarily based on domestic consumption which has continued to expand in spite of slower GDP growth."