Monday 5 March 2012
City Developments 4Q Net Profit Falls 32% On Lower Rental Income
Property developer City Developments on Wednesday reported a 32.3 percent drop in its fourth-quarter net profit mainly due to lower rental income, and flagged a challenging outlook for 2012 amid global economic uncertainties.The group remains optimistic that “resilient” demand will support its key Singapore residential market, as well as China’s slowing real estate sector.
“While the sales volume for new property launches is still relatively strong, the group is cognizant that market conditions could be affected by the global economic conditions in the months ahead,” City Developments Executive Chairman Kwek Leng Beng said in a statement.
City Developments “will carefully select the appropriate type of developments to launch in a timely manner, mindful of buyers’ appetite and demand,” Kwek said, adding that he expects the group to remain profitable in 2012.
Noting that most analysts expect China’s property prices to correct by a maximum 15 percent to 20 percent range, City Developments said it is devoting an additional $500 million toward potential business and land acquisitions there. The developer also expects further cuts to China’s reserve requirement ratio for banks this year, which could boost the property market due to higher liquidity and bank lending.
Net profit for the three months ended 31 December was $163.2 million, down from a restated $241 million a year ago and missing the average $193 million estimated by five analysts polled by Dow Jones Newswires. City Developments said the lower profits from rental properties was partly due to the absence of one-time gains from asset sales recorded in the fourth-quarter of 2010.
The developer restated comparable figures for 2010 in accordance with new financial reporting standards adopted last year, which recognises overseas projects and certain local projects only when they are fully completed. It originally stated 2010 fourth-quarter net profit at $176.7 million.
Fourth-quarter revenue was $721.5 million, up 7.4 percent from $671.6 million a year ago. The company proposed a dividend of 18 Singapore cents a share for 2011.
Net profit for 2011 rose 1.9 percent to $798.6 million from $784 million.
“While the sales volume for new property launches is still relatively strong, the group is cognizant that market conditions could be affected by the global economic conditions in the months ahead,” City Developments Executive Chairman Kwek Leng Beng said in a statement.
City Developments “will carefully select the appropriate type of developments to launch in a timely manner, mindful of buyers’ appetite and demand,” Kwek said, adding that he expects the group to remain profitable in 2012.
Noting that most analysts expect China’s property prices to correct by a maximum 15 percent to 20 percent range, City Developments said it is devoting an additional $500 million toward potential business and land acquisitions there. The developer also expects further cuts to China’s reserve requirement ratio for banks this year, which could boost the property market due to higher liquidity and bank lending.
Net profit for the three months ended 31 December was $163.2 million, down from a restated $241 million a year ago and missing the average $193 million estimated by five analysts polled by Dow Jones Newswires. City Developments said the lower profits from rental properties was partly due to the absence of one-time gains from asset sales recorded in the fourth-quarter of 2010.
The developer restated comparable figures for 2010 in accordance with new financial reporting standards adopted last year, which recognises overseas projects and certain local projects only when they are fully completed. It originally stated 2010 fourth-quarter net profit at $176.7 million.
Fourth-quarter revenue was $721.5 million, up 7.4 percent from $671.6 million a year ago. The company proposed a dividend of 18 Singapore cents a share for 2011.
Net profit for 2011 rose 1.9 percent to $798.6 million from $784 million.
