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Highlights from Amara Holdings’ Latest First Quarter Earnings

Amara Holdings (SGX: A34), a hotel and property investor and developer, announced its first quarter earnings yesterday. Some of the hospitality brands under the company include Amara Signature, Amara Hotels, and Amara Sanctuary. The company has also opened a life-style mall called 100 AM in November 2012 near Tangjong Pagar MRT station to serve the working population near Singapore’s Central Business District.

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Performance for the quarter

The company recorded revenue of S$17.9 million for the quarter ended 31 March 2014, down 27% from S$24.6 million in the previous year. The drop in revenue was primarily attributable to zero sales of residential development properties in the first quarter this year. Higher rental revenue from 100 AM had helped to offset some of the revenue decline though. In any case, the decline in revenue had led to a corresponding 32% drop in profits to S$3.4 million.

As for the balance sheet, Amara Holdings’ cash hoard had dropped by some 56% from S$12.6 million three months ago to S$8 million; the company has had to drawdown funds for the payment of its projects. But while cash on hand had decreased, the company’s borrowings had remained relatively steady at S$227 million.

What’s next for the company

With regard to its first quarter results, management has this to say:

“In Singapore’s hospitality sector, growth is expected to slow in the coming quarters. Increased levies on costs and increasing labour shortages shall also provide additional challenges to the sector.

To meet these challenges, we are continually upgrading our services and product offering, and focus on maintaining occupancy rates and our market share. We have relaunched our newly renovated Elements restaurant and bar with a new theme in December 2013, and more upgrading of our products are being planned.

In our Property Investment and Development segment, our revenue shall be affected by the softening of prices and sales volume in the residential property market. This would be partially offset by improved rentals from our 100 AM shopping mall and office tower, which is enjoying full occupancy”.

Foolish Summary

The company’s management seems to be aware of the poor outlook going forward in terms of rising costs and slowing growth in its markets. Thus, the company will be focusing on upgrading its services and products along with the renovation of one of its food and beverage outlets to mitigate such risks. With Amara Bangkok up and running in the second half of 2014, investors might see revenue growth coming from the company’s hotel business.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.