CDL's profit in first half plunges 99% as Covid-19 pandemic hits business

An architectural model of City Developments' 592-unit Amber Park at the sales gallery. With the circuit breaker affecting Singapore residential sales in the first half, CDL said the group and joint venture associates sold 356 units totalling $514.7 m
An architectural model of City Developments' 592-unit Amber Park at the sales gallery. With the circuit breaker affecting Singapore residential sales in the first half, CDL said the group and joint venture associates sold 356 units totalling $514.7 million, compared with $1.6 billion in sales for the year-ago period. PHOTO: CDL

Group thoroughly reviewing hotels segment, with close watch on global travel sentiment

Earnings plunged at property heavyweight City Developments Limited (CDL) in the first half year as the Covid-19 pandemic "severely impacted" its businesses, especially its hotel operations.

CDL group chief executive Sherman Kwek said a thorough review is ongoing for the hotels segment, while a close watch is being kept on signs of improvement in global travel sentiment.

The group is exploring the possible divestments of non-core hotels and China investment properties.

CDL's net profit for the six months to end-June fell 99.1 per cent to $3.1 million, from $362 million for the same period last year, CDL said yesterday.

This resulted in a first-half loss per share of 0.4 cent, after deducting preference dividends of $6.4 million which were paid on June 30. This compares with earnings per share of 39.2 cents in the year-ago period.

Revenue for the first half fell 32.8 per cent to $1.07 billion, from $1.6 billion a year ago. The decline was seen across all business segments, but with hotel operations accounting for 82 per cent of the drop.

CDL executive chairman Kwek Leng Beng said pressures will remain on the group's hotel operations in the subsequent quarters, although its property development and investment properties segments have been relatively resilient.

"Despite the uncertainties, we are confident that with the eventual pent-up demand for travel, the road to recovery will be accelerated, especially when a vaccine for Covid-19 is likely to be available next year," he said.

Earnings were mainly dragged down by hotel operations posting a pre-tax loss of $208.2 million, which included $33.9 million of impairment losses made in view of the pandemic.

As of end-June, 28 per cent of the group's 152 hotels worldwide were temporarily closed and those that remained open were operating at much lower occupancy. In constant currency, global hotel revenue per available room fell by 56.6 per cent to $60.30 from $139.10 a year ago, while global occupancy dropped to 39.4 per cent from 72.2 per cent.

CDL noted that earnings were also impacted by lower divestment gains, which in the corresponding period last year included a $197.2 million pre-tax gain from the divestment of Manulife Centre and 7 & 9 Tampines Grande. In contrast, the divestment gains for the first half of this year came to $49.9 million from the sale of Millennium Hotel Cincinnati and the disposal of a 75 per cent stake in subsidiary Sceptre Hospitality Resources.

  • $208.2m 

    Pre-tax loss by CDL's hotel operations, the main drag on its half-year earnings. It included $33.9 million of impairment losses made in view of the pandemic.

    28% 

    Proportion of the group's 152 hotels globally that were temporarily closed as of end-June. 

    56.6% 

    Fall in global hotel revenue per available room to $60.30, in constant currency, down from $139.10 a year ago.

 
 
 

With the circuit breaker affecting Singapore residential sales in the first half, CDL said the group and joint venture associates sold 356 units totalling $514.7 million, compared with $1.6 billion in sales for the year-ago period, which also gained from more ultra-luxury projects that had fatter profit margins.

To date, the group's 861-unit The Tapestry and the 716-unit Whistler Grand have sold 842 and 576 units respectively, while Amber Park has sold 211 of its 592 units, said CDL. Its joint venture 820-unit executive condominium project, Piermont Grand, and the 680-unit Sengkang Grand Residences, have sold 577 and 255 units respectively, the company added.

CDL said it plans to launch in this quarter its condominium project with Hong Leong Holdings, the 566-unit Penrose in Sims Drive, close to Aljunied MRT station.

Next year, CDL plans to launch a condominium comprising about 540 units in Irwell Bank Road, as well as the residential component of its joint venture Liang Court redevelopment, comprising some 700 units.

The group is also filing for provisional permission to redevelop Fuji Xerox Towers in the Central Business District into a 51-storey freehold mixed-use development.

Preliminary planning applications are currently being reviewed to redevelop Central Mall.

CDL shares closed 1.4 per cent higher at $8.46 yesterday.

 
A version of this article appeared in the print edition of The Straits Times on August 14, 2020, with the headline 'CDL's profit in first half plunges 99% as pandemic hits business'. Print Edition | Subscribe