Sinarmas Land's 3Q profits took a 62.6% nosedive to $17.4m

Blame it on unfavorable currency translation.

Sinarmas Land reported lower Profit After Tax and Minority Interests (PATMI) for the third quarter ended 30 September 2016 by 62.6% to S$17.4m due to lower foreign exchange gain and the absence of the one-off exceptional gain.

Excluding the exceptional gain, PATMI would have decreased 16.4% instead.

Revenue for 3Q and 9M 2016 decreased 23.6% and 22.7% respectively to S$145.9m and S$548.6m mainly attributable to lower sales of land for commercial and industrial purposes in Indonesia as well as slower sales recognition pattern after the extension of a longer instalment payment scheme.

Despite the drop in 9M 2016 revenue, recurring rental income grew 28.6% to S$110.3m, derived mainly from the UK property division that jumped 411.9% to S$21.5m (9M 2015: S$4.2m) following contribution from Alphabeta building acquired in October 2015, as well as higher rental income from Indonesia investment properties due to new leases being signed at improved average rental rates.

Mirroring the dipped in revenue, 3Q & 9M 2016 gross profit declined by 23.5% and 23.7% respectively to S$105.8m and S$378.8m. Gross profit margin edged up 0.1 percentage points to 72.5% in 3Q 2016 (3Q 2015: 72.4%) on the back of lower industrial land cost but slipped 0.9 percent points to 69.1% in 9M 2016 (9M 2015: 70.0%) due to higher service cost incurred from the UK property division and lower margins from the China property division.

The Group’s 9M 2016 EBITDA decreased 28.9% to S$275.9m due by lower gross profit, offset partial by UK property division EBITDA which increased 353.8% to S$17.7m.

The Group recorded a net foreign exchange loss of S$16.7m in 9M 2016 as opposed to S$13.0m gain in the previous corresponding period due to unrealised translation loss arising from the weakening of U.S. Dollar against the Indonesia Rupiah and Singapore Dollar.

Coupling lower profit recognized from Indonesia division, higher foreign exchange loss, higher finance costs and absence of the one-off exceptional gain, PATMI decreased 54.7% to S$68.4m in 9M 2016. Excluding the one-off exceptional gain, 9M 2016 PATMI would decreased 45.3% instead.