THE worse-than-expected results announced by Fairwood Holdings on Tuesday were largely due to a $5 million loss posted by its Thousand Island Food Plaza operation and higher rents.
Fairwood's profits climbed 21.1 per cent to $70.3 million for the year ended March 31 while sales rose 44.5 per cent to $879.4 million.
The profit growth was significantly below analysts' forecasts, as a consensus of 20 brokerages called for a 41 per cent increase to $82 million. In fact, every forecast in The Estimate Directory was above Fairwood's actual profit.
Several analysts said Thousand Island's $5 million loss came as a surprise because they were not given any indication by management that the operation would be a money-loser.
Standard Chartered analyst Y.K. Ng, who was looking for profits of $81 million, said that after meeting with management in April he had expected the Thousand Island operation to at least break even.
''I talked to them about it [Thousand Island] but they told me it wasn't doing well,'' he said. ''I didn't expect a loss. I think some analysts were probably misled.'' Nomura Research analyst Gordon Crosbie-Walsh said he was disappointed with Fairwood's results after looking for profits of $76 million.