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Sinarmas Land's Q1 net profit slides 26.3% to S$28 million

A REVENUE slide took a toll on results for Indonesian property developer Sinarmas Land in its first quarter.

Net profit tumbled 26.3 per cent to S$28 million from the preceding year's S$38 million, the group said in a Singapore Exchange filing on Monday evening.

Earnings per share dropped to 0.66 Singapore cent from 0.89 Singapore cent in the preceding year.

For the three months ended March 31, revenue tumbled 23.8 per cent to S$187 million from the year-ago period's S$245 million.

This was on the back of fewer units handed over at BSD City and and lower industrial land sales in Bekasi, Sinarmas said. But leasing income from its "Horseferry" building in London, as well as higher leasing income from its investment properties in Indonesia, helped cushion the blow.

Sinarmas has restated its Q1 2017 results after adopting the Singapore Financial Reporting Standards (International) framework this year.

The new accounting policy accounts for the time value of money for those transactions when the period between the transfer of its goods and services to the customer and full settlement exceeds a year and when cash is received in advance for the sale before the units are handed over and repayment schemes are made available to customers.

Previously, it had recognised revenue from the sale of its developments under construction using the completed contract method, which generally coincides with when the development property is delivered to the customer.

Under the old rules, revenue for the quarter was previously S$237 million, and net profit was previously S$37.2 million.

Sinarmas noted the slower growth in household consumption in Indonesia in the first quarter, and the possibility of an increase in rates to defend the rupiah.

"We expect the macro economic factors to weigh on our marketing sales this year, and as of now, we do not expect significant one-off transactions on land sale as compared to last year," it said in its statement. "Furthermore, with Indonesian regional elections happening this year, the demand for home purchases is expected to dampen, as consumers adopt the wait-and-see approach for big spending."

It will use defensive marketing tactics such as the "Price Lock" and "Price Amnesty" programmes and has tied up with 12 leading Indonesia's banks to introduce a mid-year "Easy Deal" marketing programme to help homebuyers buy their dream homes

Margaretha Widjaja, Sinarmas's executive director and vice-chairman of its Indonesia division, said: "The group shall continue to execute its geographical expansion and earnings diversification strategy to increase its recurring income base and navigate the challenges ahead."

Sinarmas Land shares closed unchanged at S$0.38 on Monday.

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