Megaworld has reported a P4.2-billion revenues for first quarter of 2020 from its rental businesses yet its capital expenditure scheduled for this year will be reduced from P60-billion to P36-billion.
The pandemic is the reason behind the move by Megaworld to reduce capital expenditure.
The first quarter revenue growth was driven from rental businesses of Megaworld’s Premier Offices and Megaworld Lifestyle Malls which is translated to an 8% growth. Megaworld earned a P3.9-billion revenues in the same period last year.
Rental revenues were office leases as mall rentals weakened during the quarter as concerns over the pandemic began to widen during this period.
On the other hand, Megaworld also reported that its hotel revenues were likewise down by 4% or from P574-million during the same period last year to P551-million this year as check-ins, particularly from international guests, dropped because of the pandemic.
Residential sales, however, grew to 1% to P9.6-billion during the first quarter from P9.5-billion as the Taal Volcano eruption during the start of the year impacted sales of its CALABARZON area projects as well as the early challenges in the supply chain due to coronavirus-related restrictions which resulted in the delays in project construction.
Megaworld’s net income for the first quarter of 2020, however, declined by 8% to P3.8-billion from P4.1-billion during the same period last year. Excluding a non-recurring gain of around P189-million, core profit declined 3% year-on-year. Net income attributable to parent company stood at P3.5-billion, lower by 9% from P3.8-billion during the said period last year.
Consolidated revenues were slightly up 1% to P15.1-billion during the first quarter compared to P14.9-billion during the same period last year. Around 64% of the company’s total revenues still came from the company’s residential business, while 28% came from rentals, and 4% from hotel operations. The rest came from the company’s non-core revenues.
According to Kevin L. Tan, chief strategy officer of the Megaworld, It is the real estate sales who helped mitigate the impact of the challenges that the conglomerate faced during the quarter.
“Our office portfolio, which remains very attractive to locators because they are mostly PEZA-accredited, provided a buffer against the expected weakness of our mall and hotel operations. We keeped an eye on effective strategies that will cushion the impact of these challenges for the rest of the year,” Tan explained.
For the period ending March 31, 2020, Megaworld registered cash reserves amounting to P25.7-billion and a net debt-to-equity ratio of 26%.