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CDL posts 33.7% drop in Q3 net profit to S$115m

CITY Developments Limited's (CDL) third-quarter net profit sank 33.7 per cent year-on-year to S$114.96 million, weighed down by impairment losses and transaction costs arising from Millennium & Copthorne Hotels' (M&C) delisting last month.

It was hit by impairment losses of about S$37 million made on two M&C hotels, Millennium Hilton Seoul and Millennium Hilton New York One UN Plaza. Stripping out the impairment and privatisation costs, profit after tax and minority interests (PATMI) would have declined by 11.4 per cent for Q3 2019, it said on Tuesday. 

Revenue for the three months ended Sept 30 was 12.9 per cent lower at S$885.3 million owing to the timing of revenue recognition for its property development segment.

Earnings per share (EPS) was 33.5 per cent lower at 12.7 Singapore cents versus 19.1 cents a year ago. Excluding hotel impairment losses and privatisation costs, basic EPS would have fallen 11.5 per cent to 16.9 cents in Q3, it said.

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Kwek Leng Beng, executive chairman of CDL, said: "With full control of M&C, the group will take a holistic review of its hotel operations segment. We will embark on an internal restructuring to improve organisational processes and drive operational efficiency to create sustainable hotel performance amid global economic headwinds and stiff competition faced by the hospitality industry."

He added: "We plan to accelerate M&C's integration with initiatives that will maximise shareholder value. These include controlling and reducing operating costs acutely, leveraging the group's global network, resources and real estate capabilities to refurbish assets for enhanced growth, repositioning underperforming assets and exploring the development of unutilised land."

CDL shares closed at S$10.67 on Tuesday, up three cents.