Far East Orchard reported Tuesday its first quarter net profit fell 55.4 percent on-year to S$3.42 million, hurt by a weaker Australian dollar.
Sales for the quarter ended 31 March fell 3.4 percent on-year to S$37.95 million, the company said in a filing to SGX.
“The lower sales from our hospitality business in Australia and Malaysia (due to the weak market conditions) was offset by higher sales from the hospitality business in Singapore (from both managed and leased properties) and our student accommodation business in the United Kingdom,” Far East Orchard said.
Finance expenses more than doubled on-year to S$4.28 million in the quarter on higher borrowings and a higher British pound interest rate, the filing said.
The share of profit of joint ventures was S$200,000 in the quarter, compared with S$4.4 million in the year-ago period, the filing said. That was mainly on the year-ago profit from the joint venture property development company in Australia, Harbourfront Balmain, which was fully sold by end-June 2018, Far East Orchard said.
In its outlook, Far East Orchard pointed to challenges in the Singapore and Australian hospitality markets.
“Trading conditions in Singapore remain highly competitive due to the absence of large events such as the Singapore Airshow and the World Cities Summit in 2019, and moderating growth in major economies which affect corporate demand and the ability to charge higher room rates,” the statement said. “Demand for serviced residences is expected to remain subdued on the back of soft corporate long-stay demand and increased competition from residential units.”
In Australia, it said hotel performance in major cities was expected to continue to soften, with new room supply in Sydney and Melbourne outpacing demand.
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