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Millennium & Copthorne 1H profit lifted by tourism, CDL property developer

Thursday 2nd August 2018

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Millennium & Copthorne Hotels New Zealand reported a 24 percent lift in first-half profit as it benefited from growth at NZX-listed residential property developer CDL Investments and a steady tourism market, although it warned it is seeing increased competition. 

The Auckland-based company said net profit increased to $39.6 million in the six months to June 30 versus $31.8 million in the prior period. Revenue lifted 22 percent to $127.5 million as its average hotel occupancy rose to 83.2 percent from 81.3 percent. 

The hotel industry has benefited from record high tourism in recent years with visitor arrivals - which includes overseas residents arriving in New Zealand for a stay of less than 12 months - reaching 3.8 million in the year to June, up 4 percent on the year and 60 percent higher than a decade earlier, according to data from Stats NZ. 

Millennium & Copthorne Hotels New Zealand said demand for accommodation remains "steady," though the imminent arrival of new competitors in regions such as Auckland and Queenstown, together with non-traditional accommodation supply, has seen rate pressure in certain market segments. 

"However, we are confident of our competitive position as we focus on the demand side of the equation in selected market segments and guest experience," said BK Chiu, managing director of both Millennium & Copthorne Hotels New Zealand and CDL investments. 

Separately, Millennium-controlled CDL Investments, which develops residential property, reported a 25 percent increase in operating profit to $25.5 million on an 18 percent gain in revenue to $60.2 million.

Chiu said the company had settled acquisitions for over 100 hectares of land.

"This secures our development future for the medium term. We continue to evaluate other opportunities and are optimistic that we will be able to add to our portfolio later in the year,” he said.

CDL also announced that it was looking at developing commercial premises for lease on its land. “These will be small-scale developments that are compatible with the residential areas and local community”, said Chiu. “We have seen demand for childcare centres and medical centres around our subdivisions and we are looking at concept drawings now and talking to interested parties about tenancies for 2020”.  

Looking ahead, he expects the 2018 annual result to better 2017 as sales continue to be steady despite some softening in forward demand. Its profit for the 2017 calendar year was $32.2 million, according to its annual report. 

Regarding the group as a whole, the company expects to better its 2017 performance with both its hotel and residential sales operations. In 2017 its annual profit was $55.1 million. 

Millennium shares gained 1.8 percent to $3.38 and have lifted 22 percent so far this year while CDL shares were up 2.2 percent at $0.92, up around 4 percent since the start of the year. 


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