Far East Orchard’s O10 earnings for the nine months ended Sept 30 increased by 18.8% to $7.6 million, on the back of a 36.7% growth in revenue to $134.1 million for the period.
The company’s hospitality business continued to recover strongly with international travel demand, driving higher occupancies and average daily rates (ADRs). Earlier in FY2023, Far East Orchard O10 ’s hospitality business was impacted by Omicron triggered restrictions and border closures.
While the company’s operating profit for 9MFY2023 also increased by 8.8% to $40.9 million, its 9MFY2023 profit after tax was flat against year before period at $7.0 million.
This was mainly due to higher operating expenses, higher financing costs driven by the rising interest environment, and the absence of one-off gains in the prior period including the de-recognition of lease liabilities recognised in the first half of FY2022, says Far East Orchard.
In 1HFY2023, the company recognised an impairment loss of $3.4 million on its mixed-used development in the UK due to a housing market slowdown amidst a high-interest rate environment.
The company says tourism demand continues to show resilience and a sustained recovery despite economic and geopolitical challenges, with international arrival numbers in Singapore reaching 84% of pre-pandemic levels as at July.
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As the tourism sector rebounds, the Far East Orchard’s hospitality business continues to record improved hotel occupancies and room rates across its portfolio. Year-to-date, the company has opened five hotels with approximately 550 rooms across Australia, Austria, Japan and Switzerland. In 2024, approximately 600 rooms are expected to open across Asia Pacific and Europe.
The company also expects demand for its purpose built student accommodation (PBSA) business in the UK to remain strong, underpinned by demographic trends. The domestic student population entering university is expected to continue rising, while the number of international students is also set to increase, building on a record number in 2022.
The UK PBSA market continues to indicate a robust outlook with expectations of sustained student demand growth and an imbalance in the demand and supply of student housing that will continue to fuel rental growth, says the company.
The increasing university demand coupled with the supply slowdown, continues to present significant growth opportunities for the company, it adds.
