SINGAPORE (Feb 22): Far East Orchard reported a 66.8% decline in FY17 earnings to $21.6 million from $65 million a year ago.
Group sales for FY17 ended at $151.2 million, or 18.2% lower than FY16. The decline was mainly due to the end of certain onerous hospitality lease agreements in Australia and New Zealand in late 2016. The group’s hospitality business in Perth, Australia also recorded lower sales in the year due to challenging operating environment.
Group gross profit for FY17 came in $51.8 million, or 12.8% lower than FY16, in line with lower sales.
Other income for FY17 was $3.7 million, or 47.4% lower than FY16 mainly due to lower interest income from lower outstanding balances due from joint venture companies.
Other net gains for FY17 comprised mainly fair value gains of $5.9 million on investment properties in Singapore and revaluation losses of $5.4 million on Rendezvous Hotel Perth Central and Oasia Suites Kuala Lumpur.
Group total expenses -- excluding cost of sales -- for FY17 were $44.3 million, or 18.6% lower than FY16. Distribution, marketing and administrative expenses decreased during the period in line with lower sales.
Share of profit of joint ventures decreased 83.1% to $11.7 million due to an absence of a one-time recognition of share of profit from its joint venture property development project, SBF Center, after the Temporary Occupation Permit was obtained in late June 2016.
In addition, share of profit from its JV development project, RiverTrees Residences, was lower in FY17 as most of the profit from the sale of units was recognised in FY16.
In its outlook, Far East Orchard says the near-term outlook for the Singapore hospitality sector is expected to remain subdued as the market absorbs additional rooms that came on stream in the second half of 2017.
Meanwhile, the group expects residential property sentiments to be positive supported by the recent increase in transaction volumes and higher home prices, and the office market recovery appears to be underway.
Shares in Far East Orchard closed 1 cent lower at $1.48.
