LONDON (Alliance News) - PIK Group PLC Monday said it is revising its full-year residential property sales guidance to 560,000-600,000 square metres due to lower-than-expected residential sales and volumes of third party construction services in the first half.
However, looking ahead, PIK said that, in line with its current development plan, the second half is expected to bring a reversal of the pre-sales trends seen in the first half.
The company also expects corresponding total cash of RUB62-70 billion for the full-year to December 31.
The Russia-focused residential developer posted gross profit of RUB7.4 billion for the six months ended June 30, from RUB7.1 billion a year earlier, driven by higher revenue for the period at RUB28.6 billion compared with RUB25.0 billion.
Revenue from the sale of apartments rose 20% to RUB24.9 billion from RUB20.8 bullion.
Net profit, however, decreased to RUB1.5 billion from RUB2.6 billion a year earlier. PIK said a number of factors contributed to the fall.
It said during the period, the new management team carried out a comprehensive review of its upcoming development portfolio, resulting in several regional and Moscow-based projects being reclassified as no longer feasible for development.
"Through the course of the portfolio review and a re-valuation based on the possibility of immediate sale, the group recognized RUB2.5 billion in non-cash impairment losses on intangible assets and work in progress," PIK said.
In turn, group's gross profit margin decreased to 26.0% from 28.3% a year earlier mainly on the back of the individual profitability of projects completed during the reporting period and additional recognized land lease costs. PIK said the negative impact on the gross profit margin from these factors is expected to subside in the second half 2014.
At an operating level, apartment transfers to customers increased 5.7% to 276,000 square metres from 261,000 square metres a year earlier.
PIK shares were untraded Monday, it last closed at USD2.64.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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