BOTH United Industrial Corporation (UIC) and its subsidiary, Singapore Land (SingLand), saw a double-digit decline in first-quarter net profit from a year earlier when one-time write-backs of deferred income tax boosted earnings.
UIC posted a 19 per cent decrease in net profit for the three months ended March 31, 2010, from $73.5 million to $59.5 million, despite a 34 per cent increase in revenue to $261.5 million.
SingLand echoed its parent company's results with a 34 per cent drop in net profit from $73.2 million to $48.2 million, even though it saw revenue grow by 35 per cent to $116.2 million.
UIC and SingLand both had a write-back of deferred income tax liability of $21.7 million and $25.5 million net of minority interests, respectively, during Q1 last year, because of the reduction in corporate tax rate from 18 per cent to 17 per cent.
Excluding the write-backs, UIC's net profit from operations increased by 15 per cent to $59.5 million and SingLand's by one per cent to $48.2 million.
Another reason for the fall in earnings for both was a double-digit drop in contributions from associated companies. This was because Q1 2009 enjoyed a $6.2 million contribution from The Sixth Avenue Residences project (fully sold and completed in August 2009).
Revenue for UIC was higher due to a $60.8 million increase in its sales of trading properties on recognition of revenue from its One Amber, Park Natura and The Trizon residential projects, and revenue from Pan Pacific Singapore hotel which rose by $4.2 million.
Both entities, however, experienced gross rental income from investment properties that was 3 per cent lower, because of lower rental rates and occupancy during the quarter.
UIC's outlook for the rest of the year remained a cautious one.
'Despite economic recovery, the office rental market will remain challenging because of the large new supply,' the group stated yesterday. 'Supported by expected growth in tourist arrivals and improving consumer confidence, the retail rental market is expected to be firm.'
Its earnings per share stood at 4.3 cents for Q1, down from 5.3 cents for the corresponding period a year ago.
For SingLand, earnings per share fell from 17.7 cents in Q1 2009 to 11.7 cents in Q1 this year.
UIC closed a cent higher in trading yesterday at $2.03, while Singapore Land closed 2 cents lower at $6.80.
Source: Business Times, 24 Apr 2010