Millennium & Copthorne NZ first-half profit jumps 98% on tourist boom, CDL

Profit attributable to shareholders of the parent company almost doubled to $23.8 million in the six months ended June 30.

Millennium & Copthorne Hotels New Zealand [NZX: MCK], which owns a portfolio of hotels and a controlling stake in property developer CDL Investments, posted a 98% jump in first-half profit as it benefited from the nation's tourism boom, strong sales from CDL and a one-time insurance gain. Its shares jumped 11%.

Profit attributable to shareholders of the parent company almost doubled to $23.8 million in the six months ended June 30, from $12 million a year earlier, the Auckland-based company said in a statement. The results included a one-time gain of $4.3 million from the final insurance settlement relating to the Millennium Hotel Christchurch, it said. Sales rose to $91 million from about $70 million.

Chairman Wong Hong Ren said the first-half results give the company confidence it is heading for a stronger full year, although he didn't give a specific forecast. In the first half, the occupancy rate at its leased and owned hotels rose to 82.3% from 78.2% a year earlier.

The company has been adding to its range of hotels and announced in June that it had taken a three-year lease over Auckland's Rendezvous Grand Auckland Hotel, to be renamed Grand Millennium Auckland Hotel, starting on September 7. The hotel's owner is a related party, CDL Hospitality Real Estate Investment Trust. The hotel is New Zealand's largest, with 452 guestrooms. Government figures show overseas short-term visitor arrivals reached 3.31 million in the year ended June 30, up 11% on the year earlier.

"As well as increased visitor arrivals and productivity improvements at our New Zealand hotels, our capital expenditure investments, revenue management initiatives and improvements to our overall costs of doing business all helped to deliver this strong half-year result", said managing director BK Chiu. The results were also boosted by "continued strong sales" by CDL Investments and the one-time insurance gain, he said.

CDL Investments, which is 67% owned by Millennium & Copthorne NZ, reported an 87% jump in first-half profit to about $16 million as sales climbed 79% to $42.8 million.

The company sold 171 sections in the first half, up from 128 a year earlier. It said demand was strongest in Auckland and Canterbury, with additional sales from the company's Hamilton subdivisions. CDL said it has completed the last stage of its Stonebrook subdivision at Rolleston subdivision and expects to complete final sales by the end of 2016. Also in the first half it said work was being undertaken and completed at Greville Rd in Auckland, Magellan Heights in Hamilton, and Prestons Rd in Christchurch "to allow for additional sales later in 2016 and into 2017."

As a result of the strong first half, it expects to post an increase in full-year earnings, the company said, without being specific.

Occupancy at Millennium & Copthorne's Zenith Residences in Sydney was unchanged at 97%. The company said litigation involving the property had been settled in the past few weeks and it expected Owners Corp would begin remediation works of the balconies in the near future.

Millennium & Copthorne shares rose 20c to $2 and have gained 24% this year. CDL's stock climbed 12% to 75c.


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