The strong-performing residential segment offset a massive decline in its hospitality business.
City Developments (CDL) popped the champagne after its FY18 profits increased 6.7% YoY to $557.33m from $522.18m, an announcement revealed. Revenue jumped 10.3% YoY from $3.83b to $4.22b.
The firm’s FY18 earnings before interest, tax, depreciation and amortisation (EBITDA) also rose 12.4% YoY to $1.19b from $1.06b, bolstered by the strong recognition of profits from the property development segment. CDL’s property development business which made up 71% of FY18 pre-tax profits.
Revenue from the property segment climbed 23.76% to $2.05b in FY18, whilst profit before tax leaped 43.44% YoY to $623.35m. This was due to contributions from developments such as Gramercy Park, New Futura, The Brownstone executive condominium (EC), The Criterion EC and The Tapestry. CDL highlighted that 115 units of New Futura at Leonie Hill Road have been sold at an average selling price (ASP) of over $3,500 psf, whilst The Tapestry has sold 580 of its 861 units for an ASP of approximately $1,350 psf.
In Singapore, CDL and its joint venture (JV) associates reportedly sold 1,113 residential units including ECs, with a total sales value of $2.2b compared to the $1.93b recorded in 2017.
However, decreases in its hotel operations profits which plummeted 73.24% YoY to $39.98m from $149.41m in 2017 dragged on CDL’s Q4 performance, with profits crashing 54.7% YoY to $77.95m in Q4 from $171.92m, whilst revenue slid 40.6% YoY to $788.31m from $1.33b.
This was blamed on higher impairment losses of $94.1 million made in hotels primarily located in United States, poorer UK hotels performance as Brexit concerns led to a reduction in the number of corporate guests from Europe and slower demand in meetings and events.
“Furthermore, increased payroll related costs both at the hotels and corporate offices, particularly the minimum wage increase that came in force in 2018 for its UK hotels, continuation of incurring certain fixed costs such as payroll and property related expenditure for Millennium Hotel London Mayfair despite its full closure, also contributed to the decline,” the firm explained. CDL’s New York hotels also remained loss-making due to its inflexible operating cost structure arising mainly from trade union staff employment.
CDL’s rental properties segment continued to perform well, with profits climbing 46.2% YoY to $58m in Q4, whilst rising 18.13% YoY to $189m in FY18. The increases were due to two acquired investment properties in the UK and several one-off items such as the $29m gain from the divestment of Mercure Brisbane and Ibis Brisbane in Australia in Q1 2018.
In Singapore, the firm plans to launch the 154-unit freehold Boulevard 88 along Orchard Boulevard, the 592-unit Amber Park development and 188-unit Haus on Handy in District 9 sometime in H1 2019.
Do you know more about this story? Contact us anonymously through this link.