The office segment continues to anchor the group’s performance with long-term tenancies and full occupancy
by NUR HAZIQAH A MALEK / pic by TMR FILE
KLCC Property Holdings Bhd (KLCCP) expects to post better earnings in the fourth quarter of 2020 (4Q20) on the back of long-term tenancies although experienced encouraging footfall and improvement in the consumer spending during the Recovery Movement Control Order (RMCO).
However, the group foresees the recent spike in Covid-19 cases especially at the malls in the Klang Valley is likely to put pressure on its earnings.
The resurgence can also potentially impact demand recovery in the hotel segment due to low patronage as the border remains closed and is anticipated to continue to be adversely affected for the remainder of the year.
KLCCP posted a 13.64% YoY lower net profit of RM156.66 million for its 3Q20 due to the hotel segment adversely affected following the MCO.
The group’s revenue for the quarter also declined to RM312.6 million from RM353.52 million mainly due to the provision of rental assistance to tenants, considering the fragile consumer sentiment surrounding the retail market due to the pandemic.
The property group CEO Datuk Hashim Wahir said the recent spike in the Covid-19 cases in the country poses great challenges to the group,” he said in a statement yesterday.
He added that as the group started to gain momentum in 3Q20, the pace has been dampened again by this unprecedented occurrence.
“Though unavoidable, we will continue to focus on responding to the needs of the organisation, mitigating the adverse market conditions and transforming our strategies towards driving recovery,” he said.
The office segment comprising the Petronas Twin Towers, Menara 3 Petronas, Menara ExxonMobil and Menara Dayabumi, continued to anchor the group’s performance, backed by its long-term tenancies and full occupancy of all office buildings.
The segment registered a marginal increase in proft before tax (PBT) at RM121.6 million with a stable revenue of RM149.7 million compared to the preceding quarter, mainly due to higher share of profit received from an associate company.
Following the lifting of the MCO on May 4, 2020, and the reopening of businesses, Suria KLCC saw a gradual recovery in performance during the quarter.
Revenue and PBT increased by 42.1% and 57.7% respectively from 2Q20 amid cautious consumer sentiment.
However, the earnings were impacted by the rental assistance and lower internal digital advertising income. Compared to 3Q19, revenue and PBT saw a decline of 15% and 23% respectively.
The hotel segment regained its momentum, achieving a revenue of RM11.7 million in the 3Q20 from RM3.5 million in 2Q20.
The improved performance was mainly contributed by higher food and beverage, and banqueting demand, good traction from the staycation promotions and activation of digital marketing initiatives to strengthen brand visibility.
In the management services segment, which comprises facility management and car parking management services, higher revenue was recorded during the quarter which saw an increase of 17.8% compared to 3Q19.
This increase was mainly due to its new business approach in the facility management services.
PBT, however, was impacted due to lower profit margin and lower carpark income resulting from the reduced number in transient parking due to the pandemic and the extended RMCO.
For the year-to-date period, the company’s net profit stood lower at RM474 million versus RM545.74 million, while its revenue also decreased to RM934.44 million against RM1.06 billion.