Berjaya Land 1QFY16 net profit plunges 73.7% on higher prize payout, GST expense

KUALA LUMPUR: Berjaya Land Bhd’s (BLand) net profit fell 73.7% to RM9.91 million or 0.2 sen a share for the first financial quarter ended July 31, 2015 (1QFY16), from RM37.66 million or 0.76 sen a share a year ago, on lower contribution from its gaming business Sports Toto Malaysia Sdn Bhd (STMSB) as a result of higher prize payout, coupled with the absorption of the goods and services tax (GST) expense.

In a filing with Bursa Malaysia yesterday, BLand said its hotels and resorts businesses also reported lower profit contributions as well as higher finance costs in 1QFY16.

However, revenue for 1QFY16 rose 7.1% to RM1.51 billion from RM1.41 billion in 1QFY15, mainly due to higher revenue from H R Owen plc from having additional outlets and higher new car sales volume, as well as favourable foreign exchange effect from the group's various foreign businesses.

The improved revenue was also contributed by higher progress billings reported by its property development and investment business.

"These have offset the lower revenue reported by the gaming business operated by STMSB and the hotels and resorts business from an overall lower occupancy rates and average room rates."

Moving forward, BLand said the gaming business is expected to be challenging in view of cautious domestic consumer spending as a result of inflationary effect on the economy and the impact of the GST being absorbed by STMSB, as well as weakening of the ringgit.

"The performance of the hotels and resorts business [is] expected to remain satisfactory, while the focus of the property development business will be on its overseas development projects.

"As such, the directors are of the view that the performance of the group will continue to remain challenging in the remaining quarters of FY16," said BLand.