Far East Orchard has reported a net loss of $0.7 million for the 1QFY2021 ended March, from the earnings of $0.9 million in the 1QFY2020.
The net loss is mainly due to the lower revenue from the hospitality business.
Revenue for the 1QFY2021 fell 29% y-o-y to $27.6 million, while the group reported an operating loss of $1.4 million from $12 million from the year before.
As such, the group reported a total loss of $3.2 million, deepening from the total loss of $2.6 million in the 1QFY2020.
The losses were steeper as the impact of Covid-19 came about towards the end of March in 2020. This was further compounded by the absence of contributions from property development in the 1QFY2021.
The group’s share of profits from the Woods Square joint venture development were recognised in the year before.
The group’s hospitality business continues to be weighted down by the absence of international travel and tourism.
Hospitality performance in the 1QFY2021 was impacted by the snap lockdowns in Australia as well as the lower hotel revenue from the Singapore market from the lack of international tourists.
The group’s operating losses were mitigated by contributions from the student accommodation business (PBSA) segment, which included the full three months of profit contribution from the King Square Studios acquired in November 2020.
The group’s PBSA portfolio maintained an occupancy level of over 80% as at March 31.
“The hospitality industry still faces a long and challenging road to recovery. Notwithstanding a handful of travel bubbles that are emerging, international travel remains extremely limited. Nonetheless, we are taking a long term view on the situation, and continuing to deepen our presence in key markets for hospitality and PBSA as part of our FEOR 25 strategy,” says Alan Tang, group CEO.
The group has a cash position of $276.4 million as at March 31.
Looking ahead, the group had a number of hotel openings in the 1QFY2021, including The Clan Hotel and Quincy Hotel Melbourne.
It will be opening its second hotel in Japan, Far East Village Hotel Yokohama in June.
On the ongoing Covid-19 situation, Tang says, “We were heartened to see multiple vaccines being approved and rolled out this year. However, challenges abound in terms of logistical and supply chain issues, side effects, and highly contagious virus variants. The recent surge in community cases here in Singapore is a stark reminder of how quickly the situation can take a turn for the worse.”
“More progress needs to be made in sustaining the mass inoculation effort at the global level, so that confidence can return and international travel can safely resume. Meanwhile, the group will continue to exercise prudence in managing its resources while positioning for the eventual recovery,” he adds.
Shares in Far East Orchard closed 1 cent higher or 0.9% up at $1.14 on May 6.
