Banyan Tree Posts $4.9m Q3 Loss, Hit By Thai Turmoil

Source : The Business Times, November 14, 2008

RESORT operator Banyan Tree Holdings posted a net loss of $4.88 million for the third quarter ended Sept 30, hit by the political turmoil in Bangkok which deterred travellers and forced the closure of Phuket Airport for a weekend in August.

Bright spot: Q3 hotel residences revenue rose to $17.2m from $3.6m, with revenue recognition from villas and suites in Phuket, Lijiang, Dusit Laguna and Bangkok

In comparison, the company earned a net profit of $49.1 million in Q3 2007, which was bolstered largely by a one-off exceptional gain of $44.5 million then arising from the recognition of negative goodwill. Revenue for Q308 was flat at $82.75 million.

Earnings per share for Q308 was negative 0.64 cents, down from 6.45 cents in Q307. For the nine months ended Sept 30, net profit plummeted 78 per cent to $13.98 million while revenue grew 19 per cent to $321.72 million.

During the quarter, hotel residences revenue surged from $3.6 million to $17.2 million, as a result of revenue recognition from villas and suites at Banyan Tree Phuket, Banyan Tree Lijiang, Dusit Laguna and Banyan Tree Bangkok.

Revenue from hotel investment dropped 13 per cent to $37.4 million on the back of lower revenue from Thailand as the political crisis in Thailand affected visitor arrivals.

At $8.7 million, property sales were also lower than Q307's $16.3 million while hotel management revenue decreased by $0.4 million to $4.3 million.

Banyan Tree said that it is embarking on a series of cost cutting and spend curbing measures in order to preserve cash.

'We are approaching the outlook of the group more cautiously given the increased deterioration of the global financial situation and a period of great uncertainties,' warned the group, adding that the political turmoil in Thailand, if protracted, could have significant impact.

'We expect fourth quarter 2008 results to be lower than last year.' However, the group expects Banyan Tree to remain profitable for FY2008.

The group has seven new hotels slated to start operations next year - two in Mexico, three in the Middle East, and one each in Bali and China.

Banyan Tree closed at 51 cents yesterday, down 3.5 cents.