Zug Estates: revaluations lead to massive increase in profits
Excluding revaluations, Zug Estates' earnings were roughly on a par with the previous year. The forecast for the year as a whole remains unchanged.
Zug Estates' net income of CHF 28.2 million in the first half of the year was several times higher than the previous year's figure of CHF 1.9 million, which is attributable to a significant improvement in the revaluation result. Adjusted for revaluation and special effects, consolidated net income increased slightly by 0.4% to CHF 18.1 million. By contrast, income from real estate grew appreciably, namely byTP3T 3.11 million to CHF 33.8 million. Zug Estates attributes this to the lower vacancy rate. In the same period of the previous year, conversion work was carried out on retail space in the Metalli shopping avenue in Zug. Like for Like, rental income increased by 2.1%.
Companies save on hotel and event expenses
In the "Hotel & Catering" segment, Zug Estates is experiencing a greater reluctance on the part of companies to book business travel and events. Income in this segment fell by CHF 5.5% to CHF 7.7 million. Gross operating profit (GOP) fell from 42.3TP3T to 37.8%, which is attributable to the expansion of the catering offering last year and which has a lower margin than the hotel business. Overall, operating income at Zug Estates increased by CHF 1.2% to CHF 43.4 million. Operating expenses, on the other hand, increased only slightly by 0.6% to CHF 15.8 million.
Revaluation gain of CHF 11.5 million
The market value of the portfolio increased by CHF 14.9 million or 0.8% to CHF 1.84 billion in the first half of the year. This includes a revaluation gain of CHF 11.5 million. In the prior-year period, a revaluation loss of CHF 18.3 million was incurred. The increase is not due to a higher discount rate - which changed only marginally from 2.91% to 2.90% - but, according to the information provided, to the letting situation and the increase in rental income. Zug Estates puts investments in the portfolio at CHF 3.5 million, compared with CHF 22.8 million in the prior-year period, in which additional co-ownership shares in Metalli in Zug were acquired.
Guidance confirmed
For the year as a whole, Zug Estates expects higher real estate income and an improvement in the operating result in the real estate segment. The vacancy rate at the end of 2024 will be "significantly lower" than in the previous year. In the Hotel & Catering segment, total income is expected to be "roughly on a par with the previous year" due to declining demand from larger companies. Overall, consolidated net income excluding revaluation and special effects of "over CHF 35 million" is still expected to be achieved in the 2024 financial year. (aw)
