CDL’s full-year earnings drop 20%

Posted by luxuryasiahome on February 27, 2009

DEVELOPER City Developments (CDL) has reported a 20per cent drop in full-year net profit to $580.9million, largely due to a lower contribution from its listed unit Millennium and Copthorne Hotels. Revenue dipped 5.2per cent to $2.95billion as home sales slowed significantly.

CDL has recommended a final dividend of 7.5cents per share.

The property development business remains the biggest earnings contributor, even as pre-tax profit fell from $506million to $476million on the back of a 10.3per cent decline in revenue to $773million.

Pre-tax profit from its hotel operations was $245million, down from $285.4million, due to lower exchange rates as the Singapore dollar appreciated against the British pound and impairment losses on certain hotel properties. Revenue fell 6.1per cent to $1.87 billion.

Revenue from rental properties rose 22.3per cent to $246.5million on higher average rents and occupancy, but pre-tax profit rose just 2per cent to $136.3million, as gains were partially offset by the impairment losses.

CDL said in its results statement yesterday only 30per cent of its units were sold under the deferred payment scheme (DPS), which allows buyers to defer the bulk of the price until completion date.

It said there was no need ‘to warrant any alarming concern on DPS buyers defaulting’. CDL executive chairman Kwek Leng Beng said the firm would sue buyers wishing to abandon purchases.

CDL’s launch plans for the first half of this year involves units in three projects, of which Livia was first released last year.

It will launch another 60 units at the 724-unit Livia in Pasir Ris as well as 100 units of the 336-unit The Arte at Thomson and 100 units of the 228-unit The Quayside Isle@Sentosa Cove.

It had already released 30 units of Livia at a reduced price earlier this month and has sold 16 units since then, or more than 350 units to date.

But this year will continue to be a tough one. ‘My personal belief is that the Singapore market will recover in 2010, 2011,’ said Mr Kwek. ‘By which time, if the Singapore market doesn’t recover, you will see a lot of sad faces everywhere.’

Yesterday, he disclosed that a large residential and commercial development project in Incheon, South Korea was off. Under the memorandum of understanding signed with South Korea’s DCChemical Company in August 2007, it was to have pumped up to US$300million (S$460million) into the project.

He also said the two partners on the large South Beach project, which CDL deferred last year, are still on board.

‘As far as construction is concerned,’ he added, ‘we would like to defer it for maybe another year or so…I have no significant worries about whether we go ahead this year, next year or the year after.’

CDL’s net gearing ratio is unchanged from 2007 at 48per cent, based on cost. If it had adopted a revaluation policy, this figure would fall to 32per cent.

Earnings per share fell to 62.5cents from 78.3cents while net asset value per share was $5.97 as at Dec31, up from $5.72 a year earlier.

CDL shares closed seven cents higher yesterday at $4.90.

Key figures
Full-year net profit: $580.9m (down 20 per cent)
Revenue: $2.95 billion (down 5.2 per cent)
Final dividend: 7.5 cents per share
Earnings per share: 62.5 cents

Source : Straits Times - 27 Feb 2009