Eco World Development posts gain in core net profit
Developer’s core EBIT advances 30% despite market challenges
PETALING JAYA: Eco World Development Group Bhd (EWD) saw a 29.6% gain in its first quarter of financial year 2018 (FY18) profit before interest, tax and financial reporting standards 10 (FRS10) (core EBIT) to RM62.6mil from the same quarter of the previous year.
The company attributed this growth in core EBIT to lower expenses incurred as well as a higher share of profits from its Malaysian joint ventures which have commenced profit recognition.
“This is notwithstanding the slight reduction of 5% and 7% in revenue and gross profit contributions, respectively, from its subsidiaries following handovers of close to 4,000 units of properties in FY17,” the company said in its press release.
Its net profit for the quarter fell to RM24.09mil from RM116.17mil in the same quarter a year ago while quarterly revenue also fell by 4.9% to RM563.59mil.
“The lower revenue and gross profit in the first quarter of FY18 is mainly attributable to the large number (close to 4,000 units) of completed properties progressively handed over at Eco Sky, Eco Majestic, Eco Botanic, Eco Spring, Eco Summer and Eco Tropics from the second to fourth quarter of FY17.
“This has reduced the revenue and profit contribution from these projects in the first quarter,” the company said in its announcement to Bursa Malaysia.
Pre-tax profit was higher in the previous year’s first quarter due to a gain of RM94.8mil which arose from the application of FRS10 – Consolidated Financial Statements – to recognise the impact of the change in its interest in Paragon Pinnacle from a 100% subsidiary to a 60% joint venture, it said.
The company said that it is also due to lower interest expense incurred to finance the company’s investments in its joint ventures, given that its 27% stake in Eco World International was only acquired in the second quarter of 2017.
“We are pleased to report that our under- lying business fundamentals remain strong as attested by the growth in our core earnings.
“This positive trend, supported by our high effective share of unbilled sales of RM6.2bil as at the first quarter of FY18, should continue as more of our joint venture projects reach the level of construction works required to enable profit recognition to commence,” president and CEO of EWD Datuk Chang Khim Wah said.
“Further, despite continued market challenges and a seasonally quiet first quarter, we have noticed a marked pick-up in sales interest after the Chinese New Year period,” he added in the press release.
In the notes to its financial statements, EWD said that despite the slower start, its management remains optimistic that sales will improve in the next few quarters of FY18.
The company said that this is based on an encouraging pick-up in sales interest following the success of the company’s “Bridging Hearts with Love” Chinese New Year campaign and numerous other marketing events held at its various project sites to usher in the lunar new year.
“We intend to build on this positive momentum by launching an exciting new campaign called ‘Celebrating Beyond Tomorrow’ shortly. This campaign will showcase not just what we have already achieved on the ground to date and the value creation we have delivered to our buyers but also the exciting new initiatives we have in store for them to make each and every EcoWorld project the most liveable in the country,” Chang said.