Far East Orchard reported Tuesday its second quarter net profit rose 53.7 percent on-year to S$2.39 million, partly on better performance of the hotels in Germany.
Sales for the quarter ended 30 June rose 3.8 percent on-year to S$37.31 million, mainly on higher sales in the existing U.K. student accommodation business and the acquisition of additional properties in March, Far East Orchard said in a filing to SGX.
The company reported a share of profit of joint ventures of S$1.53 million for the quarter, swinging from a year-ago loss of S$282,000.
The share of profit of associated companies was S$920,000, down 27.4 percent on-year, due to a year-ago one-off acquisition fee from Far East Hospitality REIT’s acquisition of Oasia Hotel Downtown, the filing said.
Finance expenses more than doubled to S$4.25 million in the quarter from S$1.09 million in the year-ago period, the filing said. Current borrowings nearly doubled to S$407.03 million in the quarter, from S$208.23 million in the year-ago period, partly due to the financing of the acquisition of three student accommodation properties in the U.K., the company said.
For the first half, Far East Orchard reported net profit fell 37 percent on-year to S$5.81 million on sales of S$75.26 million, nearly flat on-year.
In its outlook, Far East Orchard was cautious.
For the hospitality segment, “trading conditions in Singapore remain highly competitive given the absence of large events present in 2018; and slower growth in major economies which affect corporate demand,” the filing said.
In addition, the Australia hotels were expected to face a softer performance as new room supply outpaces demand in Sydney, Melbourne, Perth and Brisbane, the filing said.
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