8990 Holdings nets P1.2B

Mass housing developer 8990 Holdings reported a 44-percent drop in first semester net profit to P1.2 billion as delays in obtaining permits had pushed back production volume out of new projects, thereby curbing revenues.

Revenues reached P3 billion in the first six months, down by 36 percent from the level last year, 8990 Holdings disclosed to the Philippine Stock Exchange on Wednesday.

But compared to internal targets, 8990 Holdings said its six-month performance missed only 5 percent. It added that the first-semester bottom line was likewise “well within the internal target.”

8990 Holdings was targeting to generate P1.3 billion in net profit out of P3.2 billion revenues in the first semester.

“Main reasons for this dip are the continuing delays in the new projects’ licenses, labor shortages in the construction finishing and the momentum build-up of recently launched projects,” the company said.

8990 Holdings’ sales reservations grew by 3 percent year-on-year in the first half. The company reported weak performance in key result areas mainly from labor shortages, stricter underwriting procedures and the momentum build-up of newly launched projects.

In particular, housing production and deliveries declined by 24 percent and 53 percent year-on-year respectively.

Meawhile, earnings from its contract-to-sell CTS portfolio grew by 10 percent year-on-year to P765 millions despite a 2-percent decline in the CTS portfolio.

“Given the need to focus on strengthening the company’s balance sheet, in the wake of increasing interest rates, and a tougher permits and licensing environment, the goal for 2017 is cash generation to pare down short-term and medium-term debt,” the company said.

Despite a slow start for the year, 8990 Holdings remains bullish on prospects for the rest of 2017.

Januarius Jesus Atencio III, 8990 Holdings president, said: “We’ve already anticipated a slow start to 2017 given, historically, a change in government normally leads to a temporary disruption in our growth as a result of these political changes. And the change of government in 2016 is no exception. But what is important to realize is that 8990 has always been able to adapt to change quickly, instituting reforms and innovations needed to confront these issues allowing us to bounce back strongly, pushing the company to new and greater highs in the years to come.”

At present, 8990 still has P3.1 billion in unrealized revenues from real estate sales. The company’s land bank currently stands at 557.14 hectares or equivalent to P125.9 billion worth of projects.