IOI Properties’ 2Q21 profit down on weak property segment performance

Revenue in the hospitality and leisure segment also recorded a drop of 61%

By HARIZAH KAMEL / Pic by TMR

IOI Properties Group Bhd’s net profit fell by 20.06% year-on-year (YoY) to RM170.98 million in the second quarter ended Dec 31, 2020 (2Q21), from RM213.88 million in 2Q20.

Revenue for the quarter rose slightly by 4.82% to RM591.34 million from RM564.13 million previously mainly attributed to the property development segment.

Operating profit of the group in the quarter stood at RM217.3 million, which is RM7.6 million lower than the year before due to lower performance from the property investment, and hospitality and leisure segments as a result of reimposition of Conditional Movement Control Order (CMCO) by the government.

In a bourse filing yesterday, the property group stated that its property development segment recorded revenue and operating profit of RM494.9 million and RM192.6 million respectively in the current year quarter.

The better financial performance was mainly attributable to higher sales contribution from its China operations.

On its property investment, the group recorded RM73.6 million in revenue and RM31.3 million in operating profit, which are 23% and 41% lower respectively due to rental relief assistance extended to tenants due to the reimposition of CMCO since Oct 14, 2020.

Revenue for the hospitality and leisure segment decreased by 61% from RM54.7 million to RM21.1 million and operating profit dropped from RM8.5 million to an operating loss of RM7.7 million, mainly due to the decrease in occupancy rate and loss of revenue due to the reimposition of CMCO, the company noted in the exchange filing yesterday.

The group stated that a recovery in the property investment, and hospitality and leisure segments has been dampened by the reinstatement of the MCO 2.0.

The group’s retail and office segments will continue to adopt active and pragmatic tenant retention strategies to maintain occupancy rates and to support its tenants as business partners.

IOI Properties noted that it will maintain its aggressive marketing and promotion packages, while implementing cost optimisation strategies by progressively right-sizing the workforce in preparation for medium- and long-term recoveries in the hospitality and leisure segment.

“Overall, we expect the operating environment to remain challenging and uncertain. Nonetheless, the group will continue with its prudent and professional management approach to ensure the delivery of satisfactory performance in the coming quarters while consolidating its market position and strengthening its competitive edge to seize any opportunities which may emerge when the situation improves,” it said.

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