By SHAHEERA AZNAM SHAH
KLCCP Stapled Group’s net profit for the first quarter ended March 31, 2020 (1Q20) slid 3.9% to RM176.88 million from RM183.96 million last year following a plunge in hotel revenue amid Covid-19- induced travel and movement restrictions.
The group, comprising of KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (KLCC REIT), reported flattish revenue of RM354.59 million during the quarter against RM353.45 million a year ago.
“In the hotel segment, the quarterly performance of Mandarin Oriental Kuala Lumpur was severely impacted by the Covid-19 outbreak which saw year-on-year revenue decline 33.8% to RM28.1 million, resulting in a loss for the hotel,” the group said in a Bursa Malaysia filing yesterday.
Though the hotel had a good run in January 2020, it suffered afterwards as events were cancelled and travel plans postponed due to Covid-19 and Malaysia’s Movement Control Order (MCO).
The office and retail segments saw revenues increase by 0.42% to RM149.96 million and 3% to RM133.86 million respectively.
“The office segment, which comprises the PETRONAS Twin Towers, Menara 3 PETRONAS, Menara ExxonMobil and Menara Dayabumi, remained stable backed by the triple net lease agreements and long-term leases.
“The marginal decrease in profit before tax (PBT) by 0.3% was mainly due to a higher one-off repair and maintenance during the quarter,” the group said.
The retail segment, represented by Suria KLCC and the retail podium of Menara 3 PETRONAS, posted higher turnover on its anchor-to-speciality reconfiguration exercise, though this was partially offset by the decline in other revenue streams such as the advertising income due to the pandemic.
Phase 1 of the reconfigured space was launched on Jan 24 this year, while Phase 2, which entails the second half of the food court, is expected to be delayed in light of the MCO.
Management services revenue rose 23.74% to RM61.78 million in 1Q20, mainly from the new business approach in facility management.
“However, PBT saw a reduction of 9.7% arising from the lower-income from car parks due to the Covid-19 pandemic, the MCO and the higher depreciation as well as information technology cost from the digital initiatives undertaken by KLCC Parking Management to enhance customer experience in the car park,” KLCCP added.
The group declared an income distribution of 2.46 sen for KLCC Property Holdings and 5.84 sen for KLCC REIT, bringing the total distribution to 8.3 sen in 1Q20, to be paid on June 18, 2020.
Moving forward, the group expects its office segment to remain stable, underpinned by the triple net lease agreement and long-term leases.
But the hotel segment will be “adversely affected for the rest of the year” as a result of Covid-19. The group is also cautious on its retail segment amid the challenging operating environment considering the potential changes in consumer behaviour and sentiments upon the lifting of the MCO.
“We are likely to continue to feel the impact of Covid-19 for several months to come as the consumer sentiment is expected to remain cautious across all business segments.
“Despite the looming uncertainties, we will strive to remain resilient to deliver long-term value to our holders of stapled securities, and enhance tenants, shopper and hotel guest communications in complying with the new normal,” KLCC Property Holdings CEO Datuk Hashim Wahir said in a statement.