Hotel chain's profit drops,revenue improving
Millennium & Copthorne Hotels New Zealand has reported a sharply reduced profit after tax of $6.22 million for the half year to June 30, down from $9m a year earlier.
Managing director B K Chiu said the profit did not reflect improvements in group revenue from increased sales by majority-owned residential property developer CDL Investments New Zealand and improved results from the New Zealand hotel operations.
MCK shares were up almost 6 per cent to $1.27 yesterday.
Group revenue and other income increased 16 per cent to $67.4m year on year. Operating profit for the period rose to $17.4m from last year's $14.8m.
The group profit includes $490,000 of business interruption insurance payout relating to the Christchurch earthquakes.
Discussions between the landlord of Millennium Hotel Christchurch and the insurers have continued on the repair or rebuild of this hotel. But no resolution has been reached.
"CDL has had a strong first half with good sections sales and we have also been able to make gains in occupancy and revenue per occupied room at our hotels, though these are not reflected in the bottom-line results," Chiu said.
"This was due to one-time costs relating to the preference share issue and its share of costs from First Sponsor Group's initial public offering."
CDL's first half-year sales and profit were "satisfactory", but he believed the property market was showing signs of softening.
CDL reported an unaudited interim operating profit of $8.21m after tax, well up on the $5.73m for the six months to June last year.
Revenue was also considerably higher at $24.9m, up from $15.3m.
Operating profit before tax was $11.41m, compared with $7.96m, a 43 per cent increase.
Despite a softening outlook, the company said it was aiming for an annual profit on the same level as its 2013 results, given the level of unconditional sales on hand.
"We do expect sales to be slightly softer in the second half of the year than in the first," Chiu said.
"Forecast increases in mortgage interest rates and property availability generally will impact the property markets."
CDL owns CDL Land Holdings, a subsidiary that is developing several housing areas on Auckland's North Shore, in Hamilton, Napier, Nelson, Queenstown's Arthurs Pt and Rolleston, Christchurch.
During the year the company sold 133 sections, almost double the number sold during the first half a year ago.
It added stages to its Magellan Heights subdivision in Hamilton and Stonebrook in Rolleston and acquired a further 4.1 hectares in Auckland.
Property sales and other income for the period increased by 62.3 per cent to $24.9m compared with $15.4m last year.
CDL Investments is 67 per cent-owned by Millennium & Copthorne Hotels New Zealand, which is 70 per cent owned by CDL Hotels Holdings New Zealand, a wholly owned subsidiary of Britain's Millennium & Copthorne Hotels.
Its ultimate parent is the Malaysian-owned Hong Leong Investment Holdings, based in Singapore. Fairfax NZ