UOL's 3Q profits fell 14% to $87.1m

Weak performance of associate companies a key factor to blame.

UOL Group announced net attributable profit of $87.1 million for the third quarter ended 30 September 2016 (3Q16), down 14% due mainly to lower gross profit margin and lower contributions from joint venture companies.

All the Group’s businesses, however, posted higher revenue with property development as well as hotel and other management services chalking up double-digit growth.

Group revenue rose 11% to $393.4 million with property development 19% higher at $206.6 million as a result of higher progressive revenue recognition from Riverbank@Fernvale, Botanique at Bartley and Principal Garden.

Revenue from hotel ownership and operations rose four per cent to $110.3 million with stronger contributions from Pan Pacific Tianjin, PARKROYAL Penang and PARKROYAL Parramatta. Revenue from property investments was up two per cent at $57.5 million.

Share of profit from associated and joint venture companies fell 35% to $29.1 million in 3Q16 due mainly to lower contribution from Archipelago and Thomson Three which completed in September 2015 and May 2016 resppectively.

During the quarter under review, Group expenses fell nine per cent to $64.3 million, from $70.9 million in 3Q15. Finance expenses declined 39% to $7.8 million, mainly because 3Q15 included a $5.0 million unrealised currency exchange loss on the Group’s borrowings in US Dollars to fund its investments in China.

UOL noted that prices of private residential properties in Singapore fell 1.5% in 3Q16, compared with a 0.4% decrease in the previous quarter. The demand for new homes is expected to remain sluggish. Office rentals will remain under pressure from the large influx of supply in the next one to two years, coupled with the soft demand. Retail rents are likely to remain subdued with the market undergoing structural changes. The Group’s hotels will continue to be affected by the weak global economic outlook