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Banyan Tree Holdings Ltd suffered its highest loss in history amounting to S$27.5 million for FY2015, a far cry from the profit of S$1 million in the previous year.
“2015 was the perfect storm for the Banyan Tree Group,” said its Executive Chairman Ho KwonPing in a press release.
“We started the year with great momentum in property sales and hotel bookings. But due to a confluence of factors, ranging from the devaluation of the Russian rouble to problems in many of our source markets as well as stoppages in hotel design projects affecting our fee-based income, we posted the worst loss in our history.”
The dismal net profit is also attributed to higher sales and marketing expenses for hotels, absence of fair valuation gains on investment properties and heftier provision on delinquent debts from China given the country’s cooling economy. Although this was partially offset by higher contribution from the property sales segment.
Revenue for the period rose 13 percent year-on-year to S$370.7 million, while earnings before interest, taxes, depreciation and amortization (EBITDA) fell 39 percent to S$31.0 million.
In Q4 2015, Banyan Tree incurred losses amounting to S$18.4 million compared to a net profit of S$4.1 million during the same period a year ago. Revenue for the quarter also increased by 34 percent to S$123.2 million on an annual basis, but EBITDA plummeted by 91 percent to S$1.7 million.
Moving forward, the group expects the current financial year to be a challenging year for Banyan Tree Holdings as the economy of its core markets (Europe and Russia) remains weak. Income from its Chinese properties is also forecasted to be negatively affected by the economic slowdown in China.
In fact, forward bookings at its hotels for Q1 2016 remains subdued, with total forward bookings currently 17 percent below the same period last year.
To cope with these issues, “the Group is currently streamlining its business and relooking at its business structure to create a more lean and integrated platform for sustainable growth to meet the challenges going forward,” added Ho.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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