CDL Investments boosted net profit to $22.9 million for the first six months to June from $20.8m for the comparable 2021 period.
Revenue for the company – a subsidiary of Millennium & Copthorne Hotels (MCK) – was $47.8m, a fall from $61.3m in 2021, with the property developer preserving margin by more than halving its cost of sales to $14.1m in what's been an inflationary environment.
CDL chair Colin Sim said the last six months had seen a “dramatic” change in the trading environment.
“The irony is that those changes have been caused by external factors totally outside of our control and have nothing to do with our performance or financial position,” he said.
Sim said the board was pleased that CDL had been able to withstand “some of the negative sentiment to date”, but was conscious that the current trading environment was likely to continue for some time and would impact the company’s full-year results to some extent.
He said increasing interest rates, tighter bank mortgage lending criteria and abnormally high inflation caused by global pressures would continue to be felt well into 2023.
Laying the groundwork
There was a flurry of activity across the company’s portfolio in the first six months of 2022, ranging from the settled sales of residential sections in the suburbs of Albany in Auckland and Prestons Park in Canterbury.
CDL also purchased 4.9 hectares of land in northeast Hamilton which was adjacent to some of the company’s existing land holdings and Sim said the new Hamilton holding would give the firm “further economies of scale”.
Sim said the company had the goal of matching its 2021 results and ensuring a “groundwork” for sales going into 2023.
“That will not be an easy task given the current trading environment, but we believe that it is a realistic one given our sales performance,” he said.
But Sim said those market factors would also put additional pressure on highly leveraged developers and owners who would be looking to “offload” land or other property holdings.
“CDL is not under that kind of financial pressure and will be actively positioning itself to use its resources to take advantage of suitable opportunities should they arise,” he said.
The firm will target new sales on Christian Road in West Auckland and Prestons Park in Canterbury and in Canterbury (Prestons Park) as part of its plan to reach its comparative 2021 results.
CDL said work on its Iona Block in Havelock continued. That acquisition remained subject to litigation, with rival Winton Land appealing an unsuccessful judicial review of the Overseas Investment Office approval of CDL's purchase. The appeal hearing is scheduled for May next year.
Shares of the company were unchanged at 85 cents in early NZX trading.
