UOL 3Q earnings down more than sixfold to $93 mil post UIC consolidation
SINGAPORE (Nov 13): UOL Group announced $92.8 million in earnings for the 3Q ended Sept, down more than sixfold from its restated 3Q17 earnings of $609.2 million in the absence of a one-off gain from the consolidation of United Industrial Corporation (UIC) group in 2017.
See: UIC posts 36% fall in 3Q earnings to $59.3 mil on lower sales
Revenue for the quarter fell 3% to $523.8 million from $537.9 million a year ago on lower revenue from property development, which more than offset revenue contributions from property investments, hotel ownership & operations, as well as management services and technologies.
The decline in revenue from property development was mainly due to lower recognition from Alex Residences, which was completed in Sept 2017, as well as Principal Garden and Botanique at Bartley as the projects approach completion in 4Q18 and 1Q19, respectively.
Due to the decline in revenue contributions from property development, gross profit margin rose to 45% from 31% as the segment had higher cost margins than others.
Marketing & distribution, administrative, and other operating expenses all grew 5%, 20% and 19% to $21.7 million, $30.1 million and $33.7 million, respectively, due to the consolidation of UIC Group which commenced in Sept 1, 2017.
This means three months of expenses consolidated for 3Q18 was compared to 1 month for 3Q17.
Finance expenses were the only exception, falling 17% to $9.4 million due to the higher capitalisation of borrowing costs for development projects.
As UIC Group and the UOL’s common associated and joint venture companies with UIC Group were no longer equity accounted from Sept 2017, share of profit of associated and joint venture companies declined 95% to $1.7 million in 3Q18.
Going forward, UOL expects office rents to be on the uptrend giving strong demand from a wide range of sectors coupled with limited new supply, although retail rents remain soft on challenges from e-commerce and manpower shortage.
The group also notes that its recently-launched projects, Amber45 and The Tre Ver, have achieved healthy sales of close to 70% and 30% respectively.
Shares in UOL closed 6 cents lower at $6.18 on Tuesday.
