SINGAPORE (May 7): Developer Far East Orchard reported 1Q19 earnings of $3.4 million, down 55.4% to $7.7 million a year ago on lower share of profit of associated companies.
1Q revenue dipped 3.4% to $38 million from a year ago due to foreign currency translation losses of $1.2 million arising from a weakening Aussie dollar.
Lower sales from its hospitality business in Australia and Malaysia due to the weak market conditions was offset by higher sales from the hospitality business in Singapore from both managed and leased properties and its student accommodation business in the United Kingdom.
Group gross profit increased 4.7% to $16.1 million in 1Q19 while gross profit margin decreased to 37.3% from 39.1% largely due to lower sales from its hospitality business in Australia and Malaysia.
Other income in 1Q19 was 44.8% higher at $1.2 million due to higher interest income from cash and cash equivalents.
Group’s share of profit of joint ventures for 1Q19 shrunk to $0.2 million from $4.4 million in 1Q18 mainly due to absence of share of profit from its JV development project in Australia, Harbourfront Balmain, which was fully sold and delivered to the buyers by June 30 2018.
Looking ahead, Far East Orchard says trading conditions in Singapore remain highly competitive due to the absence of large events such as the Singapore Airshow and the World Cities Summit in 2019 while moderating growth in major economies which affect corporate demand and the ability to charge higher room rates.
Demand for serviced residences is also expected to remain subdued on the back of soft corporate long-stay demand and increased competition from residential units.
As at end March, NAV stood at $2.84 per share.
Shares in Far East Orchard closed 1 cent higher at $1.29 on Tuesday before the results announcement.
