U City pivots to net profit after Covid struggles

U City completed a turnaround to record a net profit of 92 million baht in 2021, versus a net loss of 6.61 billion baht in 2020.

The real estate firm attributed the swing in performance to a rapid change of direction approved by its board and shareholders last year.

U City said the company was struggling amid the Covid-19 pandemic 12 months ago due to its heavy reliance on the hospitality business.

Revenues fell 90 per cent from their peak after closure of almost all of its 73 hotels due to government restrictions and the travel ban.

But the firm said its financial performance moved into the green after shareholder decisions to sell off its hospitality and other real estate, and to shore up its balance sheet with a capital increase.

U City said it signed an agreement on December 15 to also dispose of its European hotel assets.

It has entered into agreements to sell about 6.3 billion baht of real estate assets. The firm said it will dispose of its remaining 26-billion-baht real estate portfolio over the next three years.

In parallel, it has accelerated its move into financial services through the acquisition of Advance Life Assurance Plc (A Life) as well as significant stakes in Singer Thailand Plc (Singer) and Jay Mart Plc (JMart), as it moves to integrate financial services to the heart of BTS Group’s “3M” Strategy.

“The Company’s turnaround has been well executed so far, and we are delighted with the impact to our financial results. We expect to see more transactions that will accelerate our expansion into financial services within this year,” said Soraya Satiangoset, CFO and acting CEO of U City.

In 2021, U City recorded revenue of 6.57 billion baht, up 16.3 per cent year on year and helped by a gain from the investment in JMart.

The value of JMart and Singer shares had risen 64 per cent and 32 per cent respectively after U City’s investment, said the company, enabling U City to capture the value from major shareholder BTS Group’s MATCH strategy.

U-P, the preference shares in U City that come with dividends, were trading at 1.06 baht as of February 14.