Oryx profits plummet by N$50m
Despite a property boom in the capital and in the resort towns of Swakopmund and Walvis Bay, Oryx Property Limited, has seen its profit margins shrinking by more than N$50m within the last trading year.
The property giant slumped from a heavy profit taking off just above N$94m in the 2010/11 financial year to just above N$37m in the last financial year recorded as of end of June this year; the company’s financial statement shows.
This comes amid alarm bells by the central bank that the majority of Namibians has been going on a luxury borrowing trend, hence sacrificing infrastructure development in the country.
Bank of Namibia (BoN) in its last quarter financial analysis, revealed that despite a growing credit extension to both private and public sectors, very little money filters into infrastructure development, which is one of the major economic stimulants but rather funding importation of luxurious cars.
Meanwhile, the company also indicated that there is progress in its major face-lift of Maerua Mall, which will be coming at a whooping N$307m and that the revenue from that project upon completion in October 2013, would go a long in buffering the company’s balance sheet.
Furthermore, they have also started with the upgrade of the Baines Centre at N$13m.
Going forward, the company forecasts better prospects noting that, “Oryx has produced a robust set of full year results. The focus remains on strategic acquisitions, development of existing properties and tenant retention. The board’s investment strategy provides for further investment in existing assets and to meet major tenants’ requirements for additional space. Given our long term focus we may acquire or develop properties which could initially be dilutive, provided they will offer long term growth and sustainability to Oryx. Looking ahead, Oryx expects trading conditions to continue to be challenging in the next 12 months. Despite these, the Board of Directors is confident that Oryx will continue to deliver real growth in distributions.”
Although the company is anticipating a better future, there has also been a serious cut on banks forwarding money for mortgages on accommodation preferring car loans, which are normally short-term and high in returns.
This could also be another stumbling block for the company going forward.
The distribution for the year ended in June this year amounted to N$70.4m scooping an increase of 8.9% from N$64.7m last year.