Developers report lower earnings in 2016 as demand wanes
February 18, 2017 01:00 By SOMLUCK SRIMALEE THE NATION
COMBINED net profits of listed property firms dropped last year as sales declined by about 4 per cent and they had to ramp up their marketing budgets to drive sales in the final quarter.
Pruksa Holding, for example, announced 2016 net profit of Bt5.94 billion, down 22.65 per cent from Bt7.68 billion in 2015. Its revenue also dropped by 7.4 per cent from Bt50.67 billion in 2015 to Bt46.92 billion last year.
LPN Development reported total revenue of Bt14.65 billion, down 12.11 per cent from 2015 revenue of Bt16.67 billion. Its net profit dropped by 9.95 per cent from Bt2.4 billion in 2015 to Bt2.17 billion in 2016.
Pruksa Holding chief executive officer Thongma Vijitpongpun said that despite the decline in revenue and net profit, the company’s presales grew by 4.8 per cent from Bt42.38 billion in 2015 to Bt44.41 billion last year. This was the highest presale value since the company was established 23 years ago.
The company says it is confident the overall property market this year will be better than in 2016, forecasting growth of about 5 per cent. For its own business, Pruksa targets presale growth of 19 per cent to Bt52.9 billion this year, while revenue grows by 9 per cent on targeted transfer value of up to Bt50.2 billion, he said.
Pruksa has set aside a budget of Bt4.9 billion to build a hospital in Bangkok’s central business district. Construction will start this year, with operation to start in 2020. This is part of the firm’s plan to generate recurring income for the long term, Thongma said.
LPN Development managing director Opas Sripayak attributed his firm’s declining performance last year to lower demand in the second half, while commercial banks restricted mortgage approvals to lower-income people.
“This year we are shifting our business focus to the middle- and upper-income markets to drive our business growth,” he said.