IOI Properties 2Q earnings hit by softer sales

By FARA AISYAH / Pic By Ioicitymall

IOI Properties Group Bhd’s earnings for the second quarter ended Dec 31, 2019 (2Q20), dropped 7.03% year-on-year (YoY) to RM199.75 million due to lower contribution from its property development segment and lower share of profit in joint ventures.

Earnings per share for the three months was 3.63 sen as quarterly revenue fell 14.42% YoY to RM564.13 million.

For the quarter, the group’s property development segment recorded revenue and operating profit of RM410.9 million and RM156.8 million respectively, which is 20% YoY and 30% YoY lower respectively, due to lower revenue contribution from its Johor Baru and China operations.

For its Johor operations, most of the remaining unsold units are Bumiputera lots pending release from the governing authority.

As for its China operations, the developer, in its exchange filing yesterday, stated lower revenue recorded in the quarter due to lesser sales from IOI Palm City development projects.

The group’s property investment segment’s revenue of RM95.28 million for 2Q20 is 4.38% higher YoY mainly due to more profit contribution from the retail subsegment arising from higher occupancy rate and average rental rate post re-fit exercise carried out on IOI Mall, Puchong, and renewal of tenancies at IOI City Mall, Putrajaya.

The group’s property investment segment posted an opera-ting profit of RM52.88 million which is lower by 1.53% YoY due to pre-operating expenses incurred for future investment properties such as Central Boulevard, IOI City Mall Phase 2 and IOI Palm City Mall, China.

IOI Properties’ hospitality and leisure segment’s revenue in 2Q20 rose by 3% YoY to RM54.65 million attributable to higher occupancy rate secured by the hotels in Putrajaya.

The hospitality and leisure segment’s operating profit, however, decreased by 4% YoY to RM8.5 million due to lower performance by the leisure subsegment.

For the cumulative six-month period, IOI Properties’ net profit dipped 2.93% YoY to RM336.39 million, while revenue declined 9.09% YoY to RM1.1 billion.

IOI Properties said the property market remains challenging due to uncertainties in the global business environment and the Covid-19 outbreak.

“The group will continue to adopt aggressive marketing and sales strategies and focus more on the affordable housing segment for our Malaysia operations to cushion the increasingly challenging market conditions.

“The epidemic outbreak will impact sales performance in China due to deferment of pro-perty launches and the progress of the construction for the coming quarters,” it noted in the filing yesterday.

It added that the contagious impact of coronavirus has reduced economic activities and the momentum of the property market in China has temporarily decelerated.

Despite the challenging and uncertain operating environment, IOI Properties remains optimistic on the longer term prospects of its projects due to the locations which are served by good infrastructure and amenities.