Earnings point to weak overall outlook for firms

In the plantation sector, there was good news as United Plantations Bhd (UP) posted improved net profit in the first quarter, driven by higher palm oil prices during the period.

PETALING JAYA: The latest financial results, along with the uncertainties noted by Malaysian companies on their prospects for the year, paints a bleak outlook for the quarters ahead.

Among the corporates that announced their financial results yesterday was Sapura Resources Bhd, which saw its net loss for the fourth quarter ended January 31,2020, widen to RM14.02mil, although revenue for the period rose marginally by 2% to RM13.3mil.

The higher revenue was attributed to its aviation segment while the widened net losses were on the back of a one-off provision for a claim and impairment losses.

The company noted the challenging times, going forward, due to uncertainties owing to the Covid-19 pandemic as well as the weakening economic climate.

“The company will continue to adapt to the challenging times ahead in all its business operations to ensure its long-term sustainability, ” it said in a filing with Bursa Malaysia.

In the plantation sector, there was good news as United Plantations Bhd (UP) posted improved net profit in the first quarter, driven by higher palm oil prices during the period.

However, it said performance for the rest of the year would be difficult to predict due to the uncertainties brought about by the pandemic.

For the three months ended March 31, net profit jumped 21% to RM81.2mil, while revenue slipped to RM318mil from RM322mil previously.

The group said the pandemic and lockdowns imposed by many countries have created serious concerns about food shortages due to logistical uncertainties worldwide.

“In the medium term, we foresee large negative economic consequences globally due to the consequences of the Covid-19 virus affecting demand and thereby lowering vegetable oil prices, ” UP said.

In the telecommunications space, Digi.com Bhd saw net profit drop marginally by 2.78% to RM331.99mil for the first quarter ended March 31,2020.

Revenue increased 3.43% to RM1.56bil, buoyed by Internet and digital revenue growth.

On its prospects, the group said it remained committed to its long-term strategy, prospects and continued focus on innovation, and was “taking a practical view” on its earnings parameters, given the evolving Covid-19 situation.

Another sector that is experiencing the harsh impact of the pandemic are the real estate investment trusts (REITs).

KIP REIT told the stock exchange yesterday that net property income (NPI) for the third quarter ended March 31 came in at RM14.6mil, a 41.9% jump year-on-year (y-o-y), underpinned by higher gross revenue.

Net profit for the period was up 23.6% to RM9.1mil, although partially offset by amortisation of rental rebates, while distributable income was RM8.2mil, an increase of 9.6%.

Looking ahead, KIP REIT managing director Datuk Chew Lak Seong said it would continue to monitor developments relating to the pandemic and focus on implementing appropriate measures to ensure the long-term sustainability of the fund.

“We will continue to study the current tenant base and analyse the changing operating circumstances and challenges faced by tenants with enforced closures to develop a more reasonable leasing strategy during such trying times, ” he said.

With companies unable to ascertain the extent of the impact on their performance in quarters ahead, as the duration of the pandemic and its resulting restrictions are unknown, the general outlook appears to be bleak and fraught with uncertainty.

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