CapitaLand Q4 profit falls 39.5% as cost of sales increase

CAPITALAND'S fourth-quarter net profit fell 39.5 per cent to S$247.7 million, or 5.8 Singapore cents per share, as the absence of year-ago fair value gains exacerbated higher cost of sales.

Net profit for the full year ended Dec 31, 2015, slipped 8.2 per cent to S$1.1 billion, or 25 Singapore cents per share. The property developer is declaring a final dividend of nine Singapore cents per share, on a par with the year-ago payout.

Revenue rose 14.6 per cent to S$1.74 billion during the quarter on higher contributions from China development projects and rental revenue from serviced residences. But cost of sales increased by a steeper 25.9 per cent to S$1.4 billion on higher project costs. Provisions for foreseeable losses also increased to S$105.1 million from S$91.8 million in respect of Singapore residential projects amid challenging market conditions.

CapitaLand also suffered a 59.4 per cent drop in other operating income during the quarter, to S$120.4 million. The was mainly due to the absence of a year-ago S$212.5 million fair-value gain following the completion of the CapitaGreen project.

Looking ahead, CapitaLand expects the Singapore residential market to continue feeling the impact of property cooling measures put in place over the past few years. The company will have a Cairnhill Road project, The Nassim and Victoria Park Villas, ready for launch in the first half of 2016.

Office occupancy and rentals in Singapore are expected to remain "subdued", while retail mall income should remain steady.

Residential sales in China are forecast with steady performance in 2016, helped by favourable government policies.