SINGAPORE (July 13): City Developments Limited (CDL) is expecting a decline in its revenue for 1H20 from its hotel operations segment, property development segment, and investment properties segment, mainly due to the prolonged Covid-19 pandemic.
CDL’s hotel operations segment, mainly led by its wholly-owned subsidiary Millennium & Copthorne Hotels Limited (M&C), is expected to contribute “significant losses” on the back of global travel restrictions, and mass cancellations or postponements of events.
In a Monday statement, CDL says the measures have “adversely impacted” its hotel operations even with the issuing of government grants.
Revenue per available room (RevPAR) is expected to decline by some 50-60%, and the segment is expected to post a pre-tax loss of some $120 million to $140 million in 1H20, compared to the pre-tax profit of $76 million a year ago.
CDL says it foresees a “highly challenging and uncertain” near-term outlook until the abating of the pandemic, and the re-opening of international borders.
The group foresees a 10% decline in revenue from its property development segment, as contributions for 1H20 will be derived from uncompleted projects such as The Tapestry, and Amber Park, compared with fully-completed projects such as New Futura and Gramercy Park that yielded higher profit margins in 1H19.
CDL’s investment properties segment will also be impacted, with some $30 million of property tax and rental rebates given to tenants for its retail malls in Singapore and overseas.
Notably, the group recorded a $197 million pre-tax gain from the closure of its profit participation securities platform, as well as the sale of Manulife Centre and 7&9 Tampines Grande in 1H19.
As such, CDL anticipates a material and adverse impact to its net attributable profit after tax and minority interests (PATMI) for 1H20, which has not taken into the account the negative goodwill it expects to record from its 51.0% acquisition of Sincere Property Group in April 2020.
As at 1.58pm, shares in CityDev were changing hands 22 cents lower, or 2.5% down, at $8.49.
