8990 Holdings earnings fall amid project delays

MASS HOUSING developer 8990 Holdings, Inc. is keeping its profit growth target of 10-13% for this year, despite recording a 29% decline in earnings in the first three months.

The listed company posted a net income of P736 million in the January to March period, lower than the P1 billion a year ago, due to “lowerthan-expected sales and delays in the processing of new permits.”

Gross revenues fell 26% to P1.6 billion in the first quarter, from P2.17 billion a year ago.

“We’re still reeling from the effects of the delay in project launches last year,” 8990 Holdings President and Chief Executive Officer Januario Jesus B. Atencio III said during a press briefing in Makati City on Tuesday.

Mr. Atencio said the company is keeping its full-year income growth target at 10-13%.

“I’m not changing my guidance, I think I can catch up in the second and third quarters,” he said, adding the company expects to launch new projects that were delayed last year.

8990 Holdings expects higher sales for Urban Deca Homes Manila, with the first building on track for delivery by the third quarter.

The property developer posted a 6% increase in sales reservations in the first quarter to P1.97 billion, amid strong demand for its Deca Homes projects nationwide. Sales reservations in North Luzon surged 335% due to its new project in Marilao, while those National Capital Region sales reservation went up by 157%.

“The market is still there for mass housing, as long as we continue delivering our units quick enough and solidly, then we can just see the increase in revenues go from the second quarter and the years to come,” Mr. Atencio said.

Housing production slipped by 24%, along with housing delivered that dropped 36%, due to project delays in Davao, lack of skilled labor to complete high-rise buildings in Manila and mid-rise developments in Cebu, as well as the adjusted construction schedule in Marilao.

Mr. Atencio explained that the decrease in earnings comes as the company’s portfolio shifts to a mix of horizontal and vertical developments, from solely horizontal developments.

“Because 8990 is coming into its own in the condominium market, which necessitates a new timetable for recognizing sales… It’s going to take you at least 1.5 to 2.5 years before you can recognize sales,” he said.

Meanwhile, Mr. Atencio noted the increase in the company’s cashflows through Home Development Mutual Fund (Pag-IBIG Fund) takeouts. Cashflow from operations reached P711 million in the first quarter.

“We are happy to report a 105% increase in HDMF take-out value amounting to P917 million for the first quarter. This performance already represents 38% of our annual takeouts last year,” he said, adding that HDMF takeout now contributes 57% of gross sales.

The company aims to expand the Pag-IBIG Fund takeout to gross sales ratio to at least 70% by the end of the year.

8990 Holdings will be launching eight new projects this year, on top of three already launched and 14 ongoing projects spread out across locations in North Luzon, South Luzon, NCR, Cebu, Iloilo, Davao, General Santos, and Bacolod.

Six projects will be launched in the second quarter, with a total of 1,859 units. These include Deca Homes Sta. Barbara in Iloilo; Deca Homes South of Bacolod; Deca Mactan Prime, Urban Deca Homes Mactan and Urban Deca Homes Tica in Cebu; and Deca Homes in Talomo, Davao City.

Shares in 8990 Holdings were down by a centavo or 0.15% to close at P6.79 apiece on Tuesday.