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Why UOL isn't worried that profit is down 13% to $87.8m
Two reasons cited for its continued optimism.
But UOL remains upbeat in its outlook despite its weak 3Q12 performance, as revenue from property investments held steady and how the outlook for its new Singapore hotels -- the soon-to-open PARKROYAL on Pickering and the the newly refurbished Pan Pacific Orchard - remains positive.
"UOL Group today announced a 13% decline in net attributable profit to $87.8 million for the third quarter ended 30 September 2012 (3Q12). The Group’s revenue fell 33% to $277.7 million from $413.3 million in 3Q 11. The reduction was due mainly to the decline in property development revenue from $267.4 million to $133.7 million following the completion of some of the Group’s projects in 2011 and 2012," UOL said in the release accompanying its latest results.
"Revenue for property investments rose 1% to $41.7 million, while revenue for hotel ownership and operations decreased 1% to $91.1 million. Revenue for hotel management services dropped 26% to $3.9 million due mainly to the closure of Pan Pacific Singapore for major renovations from April to September 2012. Share of profit from associated companies in 3Q declined 31% to $25.4 million from $36.8 million due mainly to a lower share of profit from Marina Centre Holdings Pte Ltd and United Industrial Corporation Limited," it said.
"Gross profit margin in the third quarter improved to 43% as against 34% recorded in the previous corresponding period mainly due to higher revenue in the third quarter of 2011 from property development, which has a higher cost margin," it added.
"The Group’s expenses fell 10% to $52.3 million in 3Q 12 and this was due mainly to the absence of the currency exchange loss of $8.7 million incurred in 3Q11. Marketing expenses increased by 27% to $9.6 million due mainly to showflat expenses for Katong Regency," it said further.
Gwee Lian Kheng, UOL’s Group Chief Executive, said: “The Singapore residential property market has continued to be driven by low interest rates and high liquidity. However, with the recent restrictions to the tenure of loans and more supply coming on-stream, we expect any rise in prices to be moderate. With the economic slowdown, some pressure could also be felt in office rents although we expect the retail sector to remain stable.”
“We remain positive in our outlook for hotels in Singapore. The timing is just right for us to open PARKROYAL on Pickering. The adjacent office tower has been
fully leased and handed over to the tenant. The Group also recently completed the refurbishments of Pan Pacific Singapore and Pan Pacific Orchard.”
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