OUE’s net profit plunges 57% to S$337.4m in 2011

As investment properties held by the group’s associate, OUB Centre Limited, did poorly last year.

Overseas Union Enterprise Limited reported a net profit of S$337.4 million for the full year ended 31 December 2011, against a 54.2% jump in revenue to S$332.4 million.

OUE’s revenue growth was driven by higher contributions across all its business divisions. The Group’s Hospitality division enjoyed improved performance across all hotels, including the Crowne Plaza Changi Airport Hotel which was acquired in July 2011.

As a result, the Group’s Hospitality division achieved a 25.0% year-on-year increase in income to S$215.5 million, accounting for 64.8% of the Group’s overall FY2011 revenue.

Income from the Group’s Property Investment division surged 177.8% to S$106.9 million in FY2011 mainly due to full-year contributions from DBS Building Towers One and Two as well as OUE Bayfront − comprising the office building, OUE Tower and OUE Link, the retail link-bridge after reopening in 2011. As at 31 December 2011, committed occupancy for DBS Building Towers One and Two stood at 91% of net lettable area while OUE Bayfront’s occupancy rate reached 82.26%.

On the residential front, the Group’s Development property income recorded S$7.6 million, from the sale of off-plan units at its Twin Peaks development which is presently under construction.

The Group’s gross profit in FY2011 rose 60.5% to S$203.5 million. Notwithstanding a decline in other income as well as increase in administrative expenses related to the latest hotel acquisition, the Group’s profit from operations grew 79.3% to hit S$140.1 million.

For the period under review, the Group’s share of results of associates dropped 37.4% to S$39.4 million, largely due to lower fair value gains on investment properties held by the Group’s associate, OUB Centre Limited. In addition, the Group’s other gains −comprising mainly fair value gain on its investment properties and reversal of impairment losses on its China hotels property, plant and equipment − registered a 65.6% decline to S$265.5 million.

As a result, the Group’s profit after tax in FY2011 slid by 56.6% to S$337.4 million, which translates to earnings per share of S$0.34. As at 31 December 2011, the Group’s net asset value per share amounted to S$3.21, up from S$2.86 a year ago.