United Industrial Corp Q3 earnings drop by 13.1% amid Marina Mandarin consolidation

MAINBOARD-LISTED developer United Industrial Corp (UIC) saw third-quarter earnings slip on higher costs and lower share of associates' and joint ventures' profits, amid the consolidation of revenue from the Marina Mandarin hotel complex that was bought out in April.

Net profit for the three months to Sept 30 was lower by 13.1 per cent year on year, to S$52.9 million, according to results released on Friday, even as revenue grew by 28 per cent, to S$194.4 million.

Besides the higher hotel operations revenue, turnover rose in the property investments segment from UIC Building rents, and nearly doubled in property trading on higher revenue recognised from the Mon Jervois and V on Shenton residential projects.

Meanwhile, technology operations revenue grew on higher computer software and hardware sales.

Earnings per share stood at 3.7 Singapore cents, against 4.2 Singapore cents before.

UIC noted in its financial statements that selling and distribution costs and administrative expenses increased on the consolidation of Marina Mandarin expenses, while finance costs swelled on the back of interest for the borrowings for the Marina Mandarin deal.

Besides the higher spending, net profit also slipped on lower contributions from a residential joint-venture project, The Clement Canopy, where units were fully sold in April.

For the nine months, net profit more than doubled from S$232.3 million to S$543.3 million, while revenue grew by 19.7 per cent to S$598.4 million.

In its outlook statement, UIC said that it expected to take a year to "find ways and means to expand the income base" from its raised stake in the Marina Mandarin hotel and shopping complex, which UIC and parent UOL Group took over from mainboard-listed OUE and other investors in a S$675.3 million deal.

UIC also pointed to demand for "well-located residential projects with affordable prices" as a driver for its private-home business, citing the launch of Avenue South Residence in September and a joint S$491.3 million bid with UOL for a residential site in Clementi Avenue 1 in July.

No dividend was recommended for the quarter, unchanged from the year before, as UIC does not usually make interim dividends.

The counter closed flat at S$2.85, before the results were released.