Metro Q2 profit doubles with one-off boost
Singapore
ONE-OFF gains from a recently recognised associate bumped Metro Holdings from an operating loss into a doubling of net profit in the second fiscal quarter.
Metro said net earnings for the three months ended Sept 30 surged 100.4 per cent to S$61.2 million, or 7.4 Singapore cents per share, as it enjoyed an initial gain of S$59.3 million from Hong Kong-listed developer Top Spring.
That gain was a transitional negative goodwill that represented the excess of Metro's share of the fair value of Top Spring's net identifiable assets over the purchase consideration.
The Top Spring boost helped to lift Metro from a S$14.6 million operating loss that was largely due to a S$10.3 million unrecognised impairment charge from a decline in the fair value of Metro's Shui On Land investment. The company had a year-ago operating profit of S$25.7 million after recording a $30 million gain from an asset disposal.
For the first half of its financial year, Metro's net profit stood at S$71.4 million, more than double its year-ago net earnings of S$33.8 million.
Property remained the bulk of Metro's business, contributing all of its pre-tax operating profit. Average occupancy of the group's five investment properties was 93.7 per cent as at Sept 30, with Guangzhou's GIE Tower's occupancy improving to 86 per cent in September from 78.3 per cent in June. But occupancy at Shanghai's Metro City slipped to 84.9 per cent from 91.3 per cent quarter-on-quarter.
Retail's loss from operations before tax widened in the second quarter to S$388,000 from S$28,000 a year earlier. Part of that was due to higher operating expenses from pre-opening expenses incurred for Metro Centrepoint.
Metro said sentiment for the Singapore residential property market remains cautious. The retail business faces challenges in terms of competition and rising operating costs in Singapore and Indonesia. Refurbishment costs for Metro City is expected to hit profitability, although overall rental income of the property division is seen to remain steady.
Metro shares closed at 87 Singapore cents on Tuesday, lower by 0.6 per cent of half a cent, before the results were announced.
