KUALA LUMPUR (Aug 25): Sunway Bhd has reported a net loss of RM6.71 million for the second quarter ended June 30, 2020 (2QFY20), compared with a net profit of RM78.29 million in the preceding quarter, as most of its business segments had to cease operations during the Covid-19 lockdown.

The group had posted a net profit of RM246.49 million for the previous year’s second quarter. 

Revenue stood at RM556.64 million, down 42.7% quarter-on-quarter from RM971.44 million. On a year-on-year basis, the revenue was down 48.3% from RM1.08 billion. 

“The Movement Control Order (MCO) enforced by the government to contain the spread of Covid-19 from March 18 until May 3, 2020 has caused significant disruption and financial impact to the group,” Sunway said in its filing with Bursa Malaysia.

“All our operations were suspended except for healthcare and retailers offering essential products and services,” it added. 

While most of its businesses had resumed operations from May 4 onwards, Sunway said business recovery was slow due to the adaptation and compliance to the new normal and standard operating procedures. 

The group’s hospitality and leisure business under the property investment segment was the worst hit by the MCO and full operations only resumed in early July, after being suspended for over three months.

The group said the impact of the MCO was partly cushioned by cost saving measures adopted by the respective business segments. 

Sunway said its property investment segment saw a 129.2% increase in loss before tax during the quarter, with the group also seeing lower share of profit from its associate Sunway Real Estate Investment Trust (Sunway REIT), as business activities of the REIT’s retail segment was limited to the provision of essential products and services.

Meanwhile, the construction segment was affected by the suspension of construction activities during the lockdown period, which resulted in lower progress billings from local construction projects.

Similarly, the trading and manufacturing, quarry and healthcare segments saw a drop in performance due to the MCO. 

For the first half of the financial year (1HFY20), Sunway said its net profit declined 81.3% to RM71.58 million, from RM382.9 million a year earlier, while revenue fell 30.5% to RM1.53 billion from RM2.2 billion. 

“The group’s performance was undoubtedly affected by the pandemic and the MCO but the full financial impact was mitigated by several cost-saving measures adopted to reduce the group’s operating overheads. 

“The recently-announced proposed rights issue of Irredeemable Convertible Preference Shares will further strengthen the group’s capital base, when it is completed by early October 2020. The above-mentioned action plans will enable the Group to become more efficient and resilient to face the challenges ahead,” it said.

Barring unforeseen circumstances, the group expects its performance in the second half of 2020 (2HFY20) to be better than the first half. 

Sunway group chief financial officer Chong Chang Choong added in a statement: “We remain cautious on the outlook amidst the uncertainties surrounding the domestic and global economic growth prospects, as well as in the absence of a vaccine for the Covid-19. However, we expect our various business segments to recover, but it will be at a varying pace.”   

Sunway’s share price fell one sen or 0.74% to RM1.34 today, giving the group a market capitalisation of RM6.61 billion.

(Editing by S Kanagaraju)