UOL Group's profits plunged 51% in Q2 as property prices slide

Revenue also slid by 30%.

Property developer UOL Group reported a 51% slide in profits for Q2, as its profit slid to $211.7m from $431.4m in the previous quarter.

The disappointing results were due mostly to lower fair value gains from investment properties at both the group level, which slid 75% to S$85.0m, and at associated companies which fell 21% to S$52.5m.

Meanwhile, group revenue fell 30% to $213.6 million in the second quarter from $304.3 million last year. Revenue from property development fell 73% to $36.6 million.

According to a report by OCBC, the poor showing was partially offset by higher share of profits from associated companies (up 56% to S$38.4m) with stronger contributions from Pan Pacific Singapore, Archipelago and Thomson Three.

“We understand from management that Seventy St. Patrick‟s would likely be launched later this year, while its condo projects in Upper Paya Lebar and Prince Charles Crescent could come onto the market in FY15. Management indicates that conditions in the domestic residential space continue to be difficult and they would replenish land-bank on a very selective basis,” noted the report.

Here’s more from UOL:

Share of profit from associated and joint venture companies rose 56% to $38.4 million due mainly to higher contributions from Pan Pacific Singapore and the Archipelago and Thomson Three projects.

Group expenses fell 10% to $55.9 million. This was due to a 59% decrease in currency exchange losses amounting to $3.1 million in the current quarter, as compared with $7.5 million in 2013.

For the first six months ended 30 June 2014, revenue increased by 13% to $622.4 million. Pre-tax profit before fair value and other gains totalled $288.9 million, up 40% from the same first half period last year.

The increase was due mainly to higher profits from all segments, including a one-time pre-tax profit of $98.4 million from the sale of Jalan Conlay land, lower unrealised currency losses, as well as higher share of profit from the associated and joint venture companies.

Net attributable profit was however 34% lower at $332.5 million with lower fair value gains from investment properties.

Gwee Lian Kheng, UOL’s Group Chief Executive, said: “In view of the declining residential property prices and the record number of newly completed private dwellings from now till 2016, we expect the residential property market to remain subdued for a while.

“Despite the rising geopolitical tensions that could affect travel pattern in the near term, we are still positive about the long-term prospect of the hotel industry. We will continue to seek out new opportunities to expand into strategic gateway cities.”