SINGAPORE (Nov 12): City Developments Limited (CDL) reported earnings of $115.0 million for 3Q19 ended September, some 33.7% lower than $173.3 million posted last year.

On a fully diluted basis, this translated to earnings per share of 12.1 cents for 3Q19, compared to 18.2 cents in 3Q18.

3Q19 revenue fell 12.9% to $885.3 million, from $1.02 billion a year ago. This was attributable mainly to a 37.8% drop in revenue in the property development segment due to the timing of revenue recognition for development projects. 

The group notes that contributions from this segment tend to be lumpy as profits from some projects can only be recognised upon completion and not progressively. 

This was partially mitigated by higher revenue contribution from the hotel operations, investment properties and others segments, which saw increases of 4.2%, 28.3% and 6.5% respectively. 

CDL’s 3Q earnings were also impacted by impairment losses of $36.9 million on the two Millennium & Copthorne (M&C) hotels – Millennium Hilton Seoul and Millennium Hilton New York One UN Plaza – as well as the accrual of transaction costs following M&C’s delisting in October.

Other operating expenses surged 66% to $182.3 million on the back of impairment losses recognised on property, plant and equipment, property taxes, as well as insurance on hotels, other operating expenses on hotels and professional fees. 

In addition, W Singapore – Sentosa Cove, which was added to CDL’s portfolio in April, also contributed to higher other operating expenses on hotels. 

CDL’s share of after-tax profit of associates for the quarter saw a 17% increase to $10.0 million as a result of higher contributions from First Sponsor Group (FSGL), led by maiden contribution from the Star of East River project in Dongguan.

Share of after-tax profit of joint ventures surged to $38.3 million in 3Q19, from $3.3 million a year ago.

This was due to contribution from South Beach Residences and Boulevard 88, which were launched for sale in 3Q18 and 1Q19 respectively, as well as returns recognised from the sale of units in the Ivy and Eve project in Australia.

As at end September, cash and cash equivalents stood at $2.73 billion. 

CDL has declared a preference dividend of 1.96 cents per preferential share for the period, payable on Dec 31. 

CEO of CDL Sherman Kwek says, “Although the Singapore property market continues to face challenges arising from a supply overhang, CDL’s residential launches in Singapore have achieved relatively healthy sales.”

“In the meantime, we continue to accelerate our global expansion, purchasing both development sites and investment properties in our core overseas markets of UK, China, Japan and Australia. These highly selective acquisitions will support the crystallisation of our fund management ambitions and help to grow our recurring income,” adds Kwek. 

Shares in City Developments Limited closed 3 cents higher, or 0.28% up, at $10.67 on Tuesday prior to the release of results.