City Developments Profit Drops 38% as Housing Demand Slows
Stock Chart for City Developments Ltd (CIT)
City Developments Ltd. (CIT), Singapore’s second-largest developer, said profit fell 38 percent in the second quarter as the global slowdown hurt hotel occupancies and government measures curbed sales of luxury apartments.
Net income dropped to S$137.7 million ($110.5 million) in the three months ended June 30, from S$220.9 million a year earlier, it said in a statement to the Singapore stock exchange today. That lagged behind the S$151 million profit estimate in a Bloomberg Survey. Sales fell 20 percent to S$787.8 million, while income from profits on sale of investments and management fees dropped 95 percent to S$4.3 million.
Singapore home sales posted their biggest drop in 2 1/2 years in the second quarter, a government report showed. The island state’s private residential property sales declined 17 percent to 5,572 units in the three months ended June 30 from the previous quarter, according to data released by the Urban Redevelopment Authority on July 16. Debt crisis in Europe and economic slowdown in the U.S. and China are affecting Southeast Asia, Kwek Leng Beng, executive chairman at City Developments, said today at a press conference in Singapore.
“The outlook for the global economy is uncertain and fragile at this stage,” Kwek said. “The crisis is worse than six months ago,” he said, adding that it may take at least three years to recover from the crisis.
The group sold 1,299 units valued at about S$1.25 billion in the six months ended June 30, a 57 percent increase from the same period a year ago. The developer didn’t book any profits from H20 Residences, The Palette, Bartley Residences, The Rainforest and Blossom Residences as their construction is still at an early stage, it said.
The developer will start selling 94 units at Haus@Serangoon Garden in the second half, it said in a statement. It will also start selling 200 units each at Alexandra Road and Pasir Ris. The company will open its 240-room W Singapore Sentosa Cove hotel in September, it said.
The company is looking for acquisition opportunities in hotels, Kwek said at a press conference in Singapore today, adding that prices are “not cheap now.”
The company’s shares fell 0.8 percent to S$11.89 as of 11:38 a.m. in Singapore. The stock has gained 34 percent this year, compared with the 16 percent advance in Singapore’s benchmark Straits Times Index. (FSSTI)
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