SINGAPORE (April 30): CapitaLand reported earnings of $295.6 million for the 1Q ended March, down 7.4% from 1Q18 earnings of $319.1 million due to lower operating profit after tax and minority interests (PATMI) and lower the write-back of impairments.
Revenue for the quarter declined by 23.8% to $1.05 billion from $1.38 billion a year ago due to lower revenue contributions from residential projects in Singapore and China, partially mitigated by the higher handover of residential units from Vietnam, as well as higher rental revenue from properties in the US and Europe which were acquired in 2018.
Due to the lower trading income from residential projects in Singapore and China, operating PATMI decreased 20.5% to $181.9 million from $228.7 million in 1Q18.
Notwithstanding this decline, the group says CapitaLand’s recurring income from its investment property portfolio and fund management platform remain resilient and continue to underpin the quality of its earnings.
Cost of sales fell at a comparatively higher rate of 33.1% to $473.8 million from $708.2 million in the previous year, as the proportion of rental income, which had higher gross profit margin than the group’s development projects, were higher in the quarter under review.
The group also wrote back a lower $0.2 million provision for foreseeable losses regarding residential projects in Singapore, compared to $17 million a year ago upon sales of units above the previously written-down value.
Total earnings before interest and tax (EBIT) grew $802.1 million from $784.2 million in 1Q18, mainly due to higher portfolio and revaluation gains, as well as contributions from newly-acquired properties in the US and Europe.
These were however offset in part by lower contributions from residential projects in Singapore and China; markets which remain key contributors to EBIT as they collectively account for 86.3% of total EBIT.
As at end-March, cash and cash equivalents stood at $5.3 billion, up from $5.1 billion in the previous year.
Lee Chee Koon, president and group CEO of CapitaLand Group, says the group’s recently-proposed acquisition of Ascendas-Singbridge has received “overwhelming approval” from independent shareholders at the EGM held on April 12, and believes the deal will bring CapitaLand complementary asset classes and geographies to ensure the group’s sustainable growth.
“As we continue to maintain a balanced portfolio in emerging and developed markets, we will scale up our asset-light lodging portfolio and fund management platform to build and grow resilient income streams. Our active capital management, as well as strong development and operational capabilities, put us in a good position to achieve our target of sustainable double-digit returns,” says Lee.
Shares in CapitaLand closed 6 cents lower at $3.53 on Tuesday.
