Published January 9, 2009

Profit warnings ring in the reports season

City e-Solutions, Interra Resources and Japan Land are some of them

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A CHORUS of profit warnings has preceded the start of the corporate reporting season next week.

Several companies yesterday cautioned the market of lower earnings, due to a variety of factors. A City Developments subsidiary said that HK$105 million (S$20 million) in net unrealised forex and trading securities losses will result in 'significant loss' for the financial year ended Dec 31, 2008.

City e-Solutions, which is listed in Hong Kong, said this was due to 'unrealised losses arising from the fair value readjustments of the group's trading securities, and unrealised exchange loss on revaluation of foreign currency cash deposits'. The loss compares with a profit of HK$16 million achieved in 2007, the company said.

City e-Solutions, formerly known as CDL Hotels International, is the designated vehicle to spearhead e-business initiatives for the Hong Leong Group and its Singapore-based parent company, City Developments, according to the company's website.

Another company, Interra Resources, also warned that it expects to incur a net loss for the fourth quarter of 2008 due to the sharp fall in oil prices. However, the company, which has generated profits in the first three quarters of the year, expects to be profitable for the year ended Dec 31, 2008.

'As an unhedged producer of oil, Interra's profitability is significantly affected by the recent severe decline in oil prices,' the company explained.

Since the decline in oil prices, Interra said it has been working to minimise operating costs and planned capital expenditure for the coming year. 'Interra has sufficient cash on hand to meet its operating costs for the foreseeable future,' it said, adding that the company is well placed in the current environment and will continue to strive to add shareholder value in a disciplined manner.

Meanwhile, Japan Land yesterday warned that it is expecting to report a loss for the first half of the financial year ending May 31, 2009. This is due to share of losses from associated companies, higher taxation from gain in partial disposal of subsidiary, higher expenses incurred in general takeover and other corporate action exercises, it said.

Earlier this week, Delong Holdings, which put hundreds of workers on unpaid leave last October and shut several furnaces in China, said it will be reporting a loss for the full year ended Dec 31, 2008.

The profit warning came as the global financial crisis hit China's steel demand in the latter half of 2008.

The biggest company to make a profit warning recently was Cosco Corporation (Singapore), which warned that the group will post lower profits for the year ended Dec 31, 2008, compared with the previous year, due to doubtful debts and higher costs for shipbuilding and offshore marine contracts.