GuocoLand FY19 earnings fall 38% to $256 mil on lower sales and share of profit of associates

Uma Devi

SINGAPORE (Aug 26): GuocoLand reported earnings of $255.7 million in FY19 ended June, down 38% from $413.2 million in FY18 on the back of lower sales and lower share of profit of associates and joint ventures.

Revenue in FY19 fell 19% to $927 million, from $1.1 billion in the preceding year, due mainly to lower contributions from completed residential projects as the group’s inventory of completed unsold units was substantially reduced in FY18.

In an SGX filing on Friday, GuocoLand says Singapore continues to be the key revenue contributor, with contributions of approximately 80%. Projects in Malaysia and Vietnam also saw higher earnings due to higher sales.

In FY18, group revenue included contributions from projects such as Leedon Residence and Sims Urban Oasis. In addition, revenue from the Martin Modern in Singapore and Emerald projects in Malaysia were only partially recognised as they were still undergoing construction.

Correspondingly, gross profit for FY19 fell 16% to $295.9 million from $351.6 million last year, although gross profit margin remained unchanged at 32%.

Other expenses increased by 47% to $37.4 million mainly due to higher fair value losses on derivative financial instruments in the current financial year. The increase was partially offset by the loss on disposal of a subsidiary recorded in the previous financial year.

Finance costs fell 12% to $107.7 million due mainly to lower loans during the year, while share of profit of associates and joint ventures slumped by 94% to $12.8 million as substantial recognition of profit from the group’s joint venture residential project in Shanghai was recorded in the previous financial year.

Other income increased 46% to $238.8 million as a result of higher fair value gains from Singapore’s investment properties as compared to the previous financial year.

Share of profit of associates and joint ventures (net of tax) also fell 94% to $12.8 million from $207 million as substantial recognition of profit from Shanghai Changfeng Residence was recorded in FY18.

As at end June, cash and cash equivalents stood at $808.9 million.

Earnings per share on a fully diluted basis fell to 21.3 cents from 36.48 cents in the preceding year.

Looking ahead, CEO of GuocoLand Raymond Choong says, ““Despite the uncertain economic environment and challenging market conditions, GuocoLand has delivered a resilient set of results. We have recorded healthy sales at our current residential projects in Singapore and Malaysia which will contribute to future earnings as construction progresses.”

“We are confident that our development expertise and placemaking efforts at our upcoming mixed-use projects will further cement our reputation as a developer of quality urban spaces and a leader in urban rejuvenation,” Choong adds.

As at 10.44am, shares at GuocoLand are trading 3 cents lower at $1.97.