Metro H1 profit down 7.9% to S$16.9m, dragged by lower share of profit from joint ventures

PROPERTY player Metro Holdings on Friday (Nov 11) posted a 7.9 per cent year on year drop in net profit to S$16.9 million for the half year ended Sep 30.

This comes even as the mainboard-listed company chalked a 32.1 per cent jump in revenue to S$53.9 million in H1.

Earnings were dragged down by a 37.7 per cent drop in share of profit of joint ventures to S$14.9 million.

Metro said this was due to lower contributions from its investment properties in China, rental rebates and waivers granted to tenants brought about by disruptions from China’s zero-Covid policy, as well as sporadic lockdowns during the six-month period.

It noted that this was partially offset by a higher contribution amounting to S$2.5 million from its increased stake in a portfolio of properties in Australia to 30 per cent.

There was also a lower share of loss from the contributions of investment properties in China, the company said, attributed to Shanghai Plaza with its increased occupancy of 92.3 per cent.

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Metro’s retail division had a 33.9 per cent year-on-year jump in revenue due to the lower base in the previous year. The company noted that its two department stores in Singapore had shorter operating hours from mid-May to mid-August as the republic went through a “heightened alert” when Covid-19 cases increased.

H1 earnings per share fell 9.1 per cent to two Singapore cents.

No dividend was declared for H1, said the company, adding that this is usually declared at the end of a financial year.

For the next 12 months, Metro expects geopolitical challenges and looming recession brought by headwinds such as the Russia-Ukraine war, persistent inflation and the slowdown in China.

It added that rising interest rates are likely to impact capitalisation rates and the valuation of its properties.

Geopolitical tension between the United States and China is likely to affect the company’s asset valuation and foreign exchange exposure, it said.

In Singapore, rising office rents should continue to benefit its Grade A office towers at the Tampines Regional Centre, which has an occupancy rate of 89.8 per cent.

“Rental increases were observed for all industrial asset classes during Q3 as vacancy rates remained relatively tight with city-fringe business park and Science Park rents also increasing in tandem with the broader market,” the company said, adding that Metro is “well positioned” with a portfolio of 15 industrial, business park, high-spec industrial and logistics properties in Singapore.

While Metro’s total retail sales grew as the economy reopened, it noted that the retail outlook is “turning cloudy” as slower growth outlook and rising interest rates weighed on consumer confidence and spending.

“With regard to our asset management strategy, we will prioritise critical asset enhancement, while deferring uncommitted capital expenditure, implementing cost saving measures and deploying derivative instruments to hedge the underlying interest rate exposures, where possible,” Metro said.

Metro shares closed flat at S$0.65 on Friday.