Sime Darby Property swings to loss in 2Q

Sime Darby Property Bhd reported today a second quarter net loss of RM81.77 million versus net profit a year earlier and in the preceding quarter as all three business segments of the company registered losses due to the disruption caused by the Covid-19 pandemic.

In a statement to Bursa Malaysia today, Sime Darby Property said group revenue fell to RM288.23 million in the second quarter ended June 30, 2020 (2QFY20) from RM865.9 million a year earlier.

“The Covid-19 pandemic in Malaysia put the country in an almost complete lockdown during the MCO and CMCO periods and resulted in significant adverse impact on the performance of the group in the current quarter. The unprecedented global pandemic hits hard on the already weakened property market, which was evidenced by a sharp decline in all three segments in the current quarter,” Sime Darby Property said.

The MCO and CMCO stand for Malaysia’s Movement Control Order and Conditional Movement Control Order, respectively, to curb the spread of the Covid-19 outbreak.

Sime Darby Property’s three business segments comprise the property development and investment divisions besides the leisure and hospitality unit.

For 2QFY20, Sime Darby Property registered a group net loss of RM81.77 million versus a net profit of RM205.26 million a year earlier. In the preceding 1QFY20, group net profit stood at RM14.15 million, it said.

“The performance of property development segment declined significantly from a profit of RM4.8 million in the preceding quarter to a loss of RM94.4 million in current quarter. Property investment segment registered a loss of RM5.0 million as compared to a profit of RM0.5 million in the preceding quarter.

“Leisure and hospitality segment recorded higher loss of RM10.4 million as compared to RM5.4 million in the preceding quarter mainly due to lower revenue from golfing revenue, events and functions with the temporary closure of businesses during the MCO period,” the company said.

For 1HFY20, Sime Darby Property said group net loss stood at RM67.61 million versus net profit of RM470.33 million a year earlier while revenue fell to RM764.96 million from RM1.44 billion.

In the near term, the group said today it continues to review and monitor the financial impact of the Covid-19 pandemic, to remain focused on maintaining its financial discipline through cost rationalisation as well as cashflow and inventory management.

“The group recognises that the first half of 2020 was difficult and challenging. We are however already seeing promising signs of economic recovery.

“As reflected by our strong fundamentals and resilient financial position with net gearing ratio currently at 27%, the group’s long-term position remains healthy. We therefore have the potential to ride on the improved outlook going into year 2021,” Sime Darby Property said.

Malaysia’s MCO, which was initially scheduled between March 18 and 31, 2020, requires non-essential businesses to stop operations, while the public was ordered to stay at home to curb the Covid-19 outbreak.

On March 25, Prime Minister Tan Sri Muhyiddin Yassin said the government decided to extend the MCO until April 14, because updates from the National Security Council and the Health Ministry indicated an increase in Covid-19 cases.

On April 10, Muhyiddin said the government was extending the MCO until April 28.

On April 23, Muhyiddin said the MCO would be extended for another two weeks until May 12.

On May 4, news reports, quoting Senior Minister (Security Cluster) Datuk Seri Ismail Sabri Yaakob, indicated that regulations under phase four of the MCO were null and void with the commencement of the CMCO or phase five of the MCO.

On May 10, Muhyiddin said the CMCO would be extended to June 9.

On June 7, Muhyiddin said the CMCO scheduled to expire on June 9 will be replaced with the recovery movement control order (RMCO) beginning June 10 until Aug 31.

At 3.03pm today, Sime Darby Property’s share price rose 0.5 sen or 0.78% to 64.5 sen, which gives the company a market capitalisation of RM4.39 billion.

Sime Darby Property’s latest reported net assets per share stood at RM1.39.

Source : The Edge