SINGAPORE (Aug 8): City Developments (CDL) saw its earnings fall 26.4% to $162.4 million for the 2Q19 ended June, from $220.7 million a year ago.

On a fully diluted basis, earnings per share fell to 17.1 cents during the quarter, from 23.1 cents in 2Q18.

2Q19 revenue dropped 37.5% to $850.4 million, from $1.36 billion in the corresponding quarter last year.

This was primarily attributable to lower contribution from the property development segment due to timing of profit recognition for development projects. CDL notes that the segment tends to be lumpy since profits from some projects cannot be recognised progressively but only upon completion.

In 2Q19, revenue was largely recognised from The Tapestry, Gramercy Park, Hongqiao Royal Lake, Whistler Grand and Suzhou Hong Leong City Center (HLCC).

Other operating income surged to $16.9 million, from $0.7 million a year ago, largely attributable to the unwinding of CDL’s Profit Participation Securities 1 (PPS 1) and Profit Participation Securities 2 (PPS 2).

Administrative expenses grew 13.6% to $143.3 million, largely due to depreciation accounted on the right-of-use assets following the adoption of a new accounting standard for leases, as well as full quarter depreciation from investment properties that were added to the group’s portfolio last year.

Other operating expenses rose 10.2% to $122.5 million, mainly due to higher other operating expenses on hotels, contributed by W Singapore – Sentosa Cove, which the group had consolidated with effect from April 2019, as well as higher professional fees incurred.

As at end June, cash and cash equivalents stood at $2.96 billion.

The board has declared a special interim dividend of 6.0 cents per share, to be paid on Sept 12.

“US-China trade tensions continue to severely dampen market sentiments globally. Until a deal is struck between the world’s two largest economies, global markets will continue to succumb to trade jitters. Many economies, including Singapore, will be seriously affected by the escalating dispute,” says Kwek Leng Beng, executive chairman of CDL.

“Agility, discipline and experience are critical attributes that will enable the group to navigate through these persistent headwinds in today’s dynamic, disruptive and unpredictable landscape,” he adds.

Meanwhile, CDL group CEO Sherman Kwek says the group is focussing on its strategy of Growth, Enhancement and Transformation.

“By creating strong value propositions and timing our launches strategically, we have achieved healthy sales for our residential projects in Singapore. At the same time, we have further diversified overseas through transformational initiatives such as our partnership with Sincere to expand CDL’s presence in China and achieve sustainable growth there,” he says.

Shares in CityDev closed 6 cents higher at $9.12 on Wednesday.