City Developments, Singapore’s second-biggest homebuilder, posted its fifth-straight earnings decline as demand for hotel rooms dropped amid the global recession.
Net income fell 15% to $140 million, or 14.7 cents a share, in the three months ended June 30, from $165.2 million, or 17.3 cents, a year earlier, the company said in a statement to the Singapore stock exchange today. Second-quarter sales rose 0.8% to $787.1 million.
City Developments joins larger rival CapitaLand in reporting worsening earnings as the global financial crisis curbed consumer spending. Still, the two developers said they expect the outlook to improve as Singapore’s economy emerges from its worst recession since independence 44 years ago.
The company’s new home sales “momentum is likely to be sustained,” Donald Chua, a Singapore-based analyst at CIMB Research, wrote in a report today. “Management is starting to see stability” in Singapore, New York and London’s hotel operations.
Singapore’s US$182 billion ($263 billion) economy expanded more than initially estimated in the second quarter, gaining an annualized 20.7% from the previous three months, after shrinking a revised 12.2% between January and March, the trade ministry said on Aug. 11.
The property developer expects to benefit from the opening of two casino-resorts in the city-state, Chairman Kwek Leng Beng said at a briefing in Singapore today.
FALLING HOME PRICES
City Developments closed 1.9% higher at $10.02 in Singapore trading. The stock has advanced 57% this year, compared with a 48% gain in the benchmark Straits Times Index.
Home prices have fallen for a fourth straight quarter in Singapore, with an index of private residential property prices dropping 4.7% last quarter from the previous three months, the Urban Redevelopment Authority said on July 24.
Still, demand is recovering amid signs of an economic recovery, with home sales in the city-state jumping 9.1% in June from May to the highest since the authority began releasing the data.
Earnings contributions from Millennium & Copthorne Plc fell after second-quarter profit at the operator of more than 120 properties worldwide tumbled 34% on lower sales and travel demand, especially in Singapore and New York.
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