Far East Orchard's gross profit crash 83.8% to $5.3m

A massive disappointment from property projects.

According to a release, Far East Orchard Limited's gross profit for Q1 2013 at $5.3 million was lower by $27.4 million or 83.8% compared to $32.7 million achieved in Q1 2012. The decrease was mainly due to the lower contribution from property development.

Other income for Q1 2013 at $2.2 million was higher by $0.6 million, mainly as a result of higher interest income earned from placement of more fixed deposits with banks.

Meanwhile, total revenue for Q1 2013 was $17.9 million which was lower by 71.3% as compared to $62.3 million in Q1 2012. The decrease was primarily because revenue from the Floridian project had been fully recognised in previous years.

The other joint-venture property development projects are in their early stages of development. Revenue from hospitality increased by $3.5 million as compared with Q1 2012 mainly due to the hospitality management business acquired in August 2012. Revenue from property investment decreased by $1.0 million as most of the investment properties annexed to the hospitality assets were divested last year as part of the restructuring.

Expenses
Total expenses for Q1 2013 of $6.3 million had decreased by $4.1 million or 39.4% from $10.4 million in Q1 2012. The expenses were lower primarily due to lower selling expenses from property development and savings in financing costs as a result of lower borrowings. However, the decrease in expenses was offset by an increase in administrative expenses mainly due to increase in professional fees, rental expenses and staff costs.