KUALA LUMPUR (Feb 25): Lower contribution from the property development segment dragged down IOI Properties Group Bhd’s net profit by 7% in the second financial quarter ended Dec 31, 2019 (2QFY20).

It reported a net profit of RM199.75 million in 2QFY20, against RM214.86 million a year ago. This resulted in a lower earnings per share of 3.63 sen for 2QFY20, compared with 3.9 sen for 2QFY19.

In a bourse filing today, IOI Properties said operating profit of its property development segment fell 30% year-on-year in 2QFY20, mainly due to lower revenue contribution from its Johor and China operations.

Revenue for the quarter also fell 14% to RM564.13 million, from RM659.18 million in 2QFY19.

The group, nevertheless, reported a 3% increase in net profit for the cumulative six months (1HFY20) to RM336.39 million from RM326.82 million a year ago, on lower taxation incurred. Revenue for 1HFY20, however, fell 9% to RM1.1 billion from RM1.21 billion in 1HFY19, on lower contributions from its property development segment.

Looking ahead, IOI Properties said the property market remains challenging due to uncertainties in the global business environment and the outbreak of the 2019 novel coronavirus (COVID-19).

“In China, the contagious impact of the Covid-19 has reduced economic activities and the momentum of the property market has temporarily decelerated. As for the group, the epidemic outbreak will impact sales performance in China, due to deferment of property launches and the progress of the construction for the coming quarters,” it said.

It added that the retail and hospitality business would also be subject to some impact arising from COVID-19, as worldwide tourists travel experience a slow-down.

“However, the group will continue to adopt aggressive marketing and sales strategies and focus more on the affordable housing segment for our Malaysia operations, to cushion the increasingly challenging market conditions."

Shares of IOI Properties ended one sen or 0.94% higher to RM1.07 today, for a market capitalisation of RM5.89 billion.