MRCB implements austerity measures amid challenging outlook
KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) has embarked on austerity and cost cutting measures as the group believes the outlook for the economy will remain challenging for the foreseeable future.
Group managing director Mohd Imran Mohamad Salim said MRCB’s immediate priorities remained on enhancing cash flow by monetising its inventory of unsold completed stock and focusing on projects in-hand.
“The group will continue to closely monitor conditions in the broader economy and property market and revise its strategies and financial targets accordingly, including reviewing future launches if conditions dictate,” he said in the company’s 2020 Annual Report.
Mohd Imran said new launches that were initially planned for 2020 were deferred to 2021 or 2022, redirecting MRCB’s focus on marketing existing completed unsold stock of RM469 million or unsold units still under construction which totalled RM383 million as at Dec 31, 2020.
The dropout rates for sales rose due to the economic toll from the Covid-19 pandemic and the ensuing negative wealth effect, underscored by the limited availability of financing as banks approached credit approval with greater caution, leading to many buyers being unable to secure the margin of financing they required, he noted.
“Sales of our Sentral Suites and TRIA 9 Seputeh residential developments were affected by restricted viewing opportunities.
“The St Regis and Sentral Residences units were also impacted by the closure of borders, preventing viewing by their target demographic of international buyers, mainly from Hong Kong and China,” he said.
On the other hand, MRCB’s 1060 Carnegie development in Melbourne, Australia, completed in December 2019, began to recognise revenue and profits as the purchases of the completed sold units achieved financial settlement.
In 2020, 1060 Carnegie achieved sales of 71 per cent, of which 113 units out of the 173 units available for sale were financially settled.
“While this development contributed significantly to our performance, the speed of reaching financial settlement for the units sold was affected by multiple lengthy lockdowns in Victoria, Australia in the second half of the year,” said Mohd Imran.
Meanwhile, the complete halt of activities at MRCB’s construction sites during the movement control order and the slower pace of the resumption of work due to the strict movement standard operating procedures had considerably impacted construction progress in its engineering, construction and environment division.
Mohd Imran said the completion of the DamansaraShah Alam Elevated Expressway (DASH) and Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) projects have been deferred to the second quarter (2Q) of 2021 from the original target in 2Q20.
Meanwhile, construction of the Mass Rapid Transit 2 (MRT2) package awarded to MRCB and the 37km Light Rail Transit 3 (LRT3) line awarded to its 50 per cent-owned joint venture company, MRCB George Kent Sdn Bhd, are on track to reach completion in 2021 and 2024 respectively.
As of end-December 2020, DASH and SUKE reached 88 per cent and 51 per cent completion, while the MRT2 package and LRT3 projects were 81 per cent and 46 per cent complete, respectively.