KUALA LUMPUR: OSK Holdings Bhd posted net profit of RM76.76mil in the first quarter ended March 31,2020 amid a challenging period due to the Movement Control Order (MCO) which was implemented on March 18.
The company announced on Friday revenue of RM255.73mil, down by 3% from RM263.87mil a year ago while pre-tax profit (PBT) was lower by 18% at RM86.98mil from RM106.20mil. Earnings per share were 3.71 sen compared with 4.40 sen.
OSK Group said the Movement Control Order (MCO) implemented on March 18 resulted in a sharp reduction in revenue from most of its business segments between the day it was imposed until March 31, hence, affecting performance across the group.
During the quarter, the property division remained the biggest contributor to the group’s revenue.
Its revenue was RM143.77mil and PBT at RM31.08mil mainly contributed by its ongoing property development projects – namely Ryan & Miho in the Klang Valley, and Iringan Bayu, our signature township development in Seremban, Negeri Sembilan.
“The division’s performance during the quarter was also supported by the maiden contribution of profits from our iconic Melbourne Square (MSQ) mixed-use development in Melbourne, Australia, ” it said.
OSK said the property division’s performance in FY2020 will continue to be supported by sales and progress billings from ongoing projects in Malaysia with a combined gross development value (GDV) of RM1.95bil.
Among the projects are Ryan & Miho in Section 13, Petaling Jaya and the Iringan Bayu township in Seremban; You City III in Cheras and in Bandar Puteri Jaya, Sungai Petani, Kedah.
The MSQ project in Australia has recorded a strong take-up rate of over 76% since its launch in 2017, and construction is progressing as scheduled.
“Apart from the units where the settlement process has begun during 1Q 2020, more settlements will be triggered in the coming months and MSQ is expected to contribute positively to the group’s revenue in FY2020 upon successful settlement by our purchasers, ” it said.
As for its other businesses, manufacturing, capital financing and construction divisions contributed a total revenue of RM89.82mil and a profit before tax of RM17.01mil in 1Q 2020.
“The group’s 1Q2020 results were also supported by a contribution of RM55.43 million from our stake in RHB Bank Bhd, ” it said.
However, its hotel division's performance was severely affected by low occupancy rates since the Covid-19 outbreak in end-January 2020, which caused a significant adverse impact on the tourism and hospitality market across the region.
OSK said it expected the impact of the Covid-19 pandemic and the MCO would continue to linger with businesses adapting to a new normal.
“The economic impact from the Covid-19 crisis, as well as other global uncertainties are still not fully quantifiable, and as such, the group will be cautious in our approach for the foreseeable future.
“The group’s balance sheet remains healthy, as our gearing continues to stand at a manageable level with sufficient cash on hand to meet our operational needs. The group’s treasury function has also set aside sufficient reserves to cater for debt servicing and principal repayment of our loans for the next two years, ” it said.
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