SINGAPORE (April 25): Far East Orchard has posted earnings of $5.6 million for the first quarter ended March, falling 66.8% from $16.9 million a year ago.
This was mainly due to lower profits from the hospitality joint ventures and the hospitality assets in Perth, Australia, as well as higher interest expense from bank borrowings.
Revenue in 1Q17 fell 22.9% to $39.4 million, from $51.1 million in the corresponding quarter last year.
The decline was mainly attributed to the end of certain lease agreements in Australia and New Zealand in late 2016, as well as weaker performance from the two hospitality assets in Perth.
Other income fell 44.7% to $1.2 million on lower interest income from advances to joint venture companies.
Cash and cash equivalents stood at $216.6 million as at March 31, 2017.
Looking ahead, the group says the Singapore hospitality sector is likely to remain weak amid a challenging operating environment.
While outlook for the hospitality sector in Australia remains positive, Far East Orchard says outlook for the group remains challenging due to the sale of Vibe Sydney as well as an increase in supply in Melbourne and Perth.
“The group plans to continue to grow its hospitality businesses by increasing the number of management contracts, acquiring strategic assets and divesting properties to recycle capital for re-deployment towards higher yielding growth opportunities,” Far East Orchard disclosed in a filing to SGX on Tuesday.
On the property front, it says it will “continue to seek suitable real estate opportunities that fit its strategy as a diversified real estate group”.
Shares of Far East Orchard closed 3.5 cents lower at $1.65 on Tuesday.
