Thursday, August 16, 2012

City Dev posts weaker Q2 earnings

City Developments (City Dev) earnings for Q2 2012 plummeted 38 percent to S$138 million while revenue fell 19 percent to S$788 million. 


DBS said the company’s Q2 earnings were pulled down by the lack of one-offs and timing of residential billings.


The bearish Q2 results were also attributed to last year’s high base and divestment gains. Additionally, profit in the residential segment dropped 20 percent year-on-year with pre-sold projects such as Bartley Residences, The Palette, Blossom Residences, The Rainforest and H2O Residences (pictured) yet to reach recognition stage.


“This was partly offset by stable earnings from hotel and higher rental operations. For 1H2012, the group achieved net profit of S$294 million, down 42 percent year-on-year. Stripping out one-off gains, group performance was on par with 1H2011 and made up 43 percent of our full year forecast,” DBS noted.


Profit from residential property is expected to be supported by the S$1.25 billion in locked-in sales for 1H2012 and the S$2.1 billion and S$1.75 billion pre-sales realised in 2010 and 2011 respectively.


Moreover, the company expects gross margins to narrow as it launches more GLS sites acquired at current land costs.


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