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Frasers Property Ltd’s Latest Earnings: Higher Sales And Profits But More Debt

Frasers Property Ltd (SGX: TQ5) reported its full-year earnings for the fiscal year ending 30 September 2018 on Friday.

Frasers Property is a multi-national company that owns, develops and manages a diverse portfolio of properties. The properties are geographically spread out over 80 cities across Asia, Australia, Europe, the Middle East, and Africa. At the end of September 2018, Frasers Property has total assets worth approximately S$32 billion.

Let’s take a quick look at the results.

  1. Revenue increased by 7.1% year-on-year to S$4.31 billion.
  2. The company’s profit (before fair value changes and exceptional item) rose by 3.9% year-on-year to S$507.2 million. If we include fair value changes and exceptional items, profits would have increased by 10.1% to S$759 million. Fraser Property noted that the increase in earnings was boosted by recurring income sources.
  3. Earnings per share before and after exceptional items ticked up by 0.97% to 14.57 cents and 8.7% to 23.15 cents respectively.
  4. Moving on, let’s look at Frasers Property’s free cash flow (FCF). The property owner generated an operating cash flow of S$492.6 million while capital expenditure came in at S$83.70 million. The combination of higher operating cash flow and lower capital expenditure resulted in an FCF of S$408.9 million. The fiscal year’s FCF was lower compared to the company’s previous year when FCF was S$892.2 million (based on an operating cash flow of S$944.6 million and a capex of S$52.4 million).
  5. As of 30 September 2018, Frasers Property’s borrowings stood at S$14.9 billion while its cash and bank deposits was S$2.6 billion, giving it a net debt position of S$12.8 billion. A year ago, Frasers Property’s borrowings was S$11.6 billion while cash and its bank balances were S$2.4 billion, resulting in a net debt position of S$9.2 billion. As such, the company’s net debt position increased year-on-year.
  6. Net asset value for Fraser Property came in at S$2.53 at the end of the latest fiscal year, up from S$2.46 a year ago.
  7. Fraser Property declared a final dividend of S$0.062, bringing its full-year dividend to S$0.086 cents.

The Road Ahead

Mr Panote Sirivadhanabhakdi, Group Chief Executive Officer of Frasers Property, commented on its recent fiscal year:

“Our balanced approach has served us well.”

“The Group’s diversification into investment properties in developed markets has helped to smoothen the effects of the inherent lumpiness of development income. To further strengthen Frasers Property’s resilience amid an environment of increasing macroeconomic volatility, we continued to expand the Group’s recurring income base during the year. In particular, we deepened our presence in the logistics, industrial, and business park segments in markets that we are already familiar with, broadening the scale of our platforms in these sectors. The Group’s financial performance in FY18 benefitted from maiden contributions from our business parks in the UK and the first full-year contribution from our logistics and industrial assets in Continental Europe.”

“The development business is facing multiple headwinds, and heightened geopolitical risks have been presenting various challenges, one of which is to the F&B segment of our MHDV hospitality business in the UK. In today’s uncertain environment, it is important that we remain nimble and adaptable.”

“We will maintain our efforts at optimizing the operating performance of our investment properties through asset value creation and enhancement, while concurrently reviewing our investment properties portfolio regularly to identify opportunities to unlock value. The initiatives we have undertaken reinforce our network of geographic-focused and asset class-focused platforms.”

“We remain centered on Asia-Pacific and Europe as we continue to harness the strength of the Group to create more value for our customers, business partners, employees and shareholders.”

Units of Fraser Property closed trading on Friday at S$1.62, sporting a price-to-book ratio of 0.64 and a yield of 5.3%.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own any of the shares mentioned.

The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned.