Megaworld profit drops P34% to P5.9 B

Published August 13, 2020, 8:34 PM

by James A. Loyola

Megaworld Corporation, the country’s leading developer of integrated urban townships, posted a 34 percent drop in net income to P5.9 billion in the first half of 2020 from P8.9 billion in the same period last year.

In a disclosure, the firm said consolidated revenues for the first six months declined by 25 percent year-on-year to P23.8 billion from P31.7 billion last year.  

The company earned P2.1 billion in net profit during the second quarter this year, a 56 percent decline from P4.8 billion during the same period last year, as the country was reeling from the impact of the nationwide lockdown that affected most businesses.

“Just as the pandemic began in the last month of the first quarter, we already anticipated a decline in our earnings in the second quarter, but what actually surprised us was the fact that the drop wasn’t as bad as we have expected it to be, and it remains manageable,” said Megaworld Chief Strategy Officer

Kevin L. Tan.

He added that “Our strategic decision of further strengthening our office leasing business way before the pandemic started is now evidently making us more resilient.”

Leasing revenues from Megaworld Premier Offices, the company’s office leasing arm, was up 10 percent during the first six months from P5.1 billion last year to P5.6 billion during the same period this year.

Contribution of Megaworld Premier Offices now stands at 78 percent of the company’s total rental income, which mitigated the impact of partial operations of Megaworld Lifestyle Malls due to the pandemic.

“Business process outsourcing (BPO) companies and traditional offices such as corporate headquarters of multinational companies still occupy around 90 percent of our spaces, which still continued their operations even at the height of the lockdown,” said Tan.

He noted that, “We are closing some deals from many Metro Manila-based BPO companies that require an immediate expansion in our provincial townships due to eased quarantine rules there. Our current portfolio of active BPO tenant partners is still huge, and these are our first-line takers in our provincial developments.”

Megaworld’s rental income for the first half of 2020 declined by 11 percent at P7.2 billion, while hotel revenues were down 29 percent to P917.9 million from P1.3 billion.

Even as the lockdown limited selling activities for residential projects, Megaworld’s reservation sales during the first half of the year reached P38 billion, which peaked during the second quarter when most parts of the country was placed under “enhanced community quarantine.” Real estate sales during the first six months reached P14.3 billion, reflecting a 29 percent decline from P20.2 billion during the same period last year, as the company implemented “more flexibility” in payment terms during the quarantine period.