Megaworld says BPO biz blunted impact of COVID-19 crisis
MANILA, Philippines — Business processing outsourcing (BPO) companies helped shield tycoon Andrew Tan’s Megaworld Corp. from the full impact of the COVID-19 pandemic, the property giant said on Thursday.
Despite earnings dropping by a third in the first semester of 2020, Megaworld chief strategy officer Kevin L. Tan said their results were better than anticipated.
“The drop wasn’t as bad as we have expected it to be and it remains manageable,” Tan said in a statement on Thursday, citing the company’s office leasing segment.
About 90 percent of its tenants are BPOs and corporate offices of multinationals.
Megaworld, one of the country’s largest builders of integrated developments or townships, saw profit from January to June fall 34 percent to P5.9 billion. Total revenues for the period declined 25 percent to P23.8 billion.
For the second quarter alone, net income fell 56 percent to P2.1 billion.
Tan said the company had expected a decline in earnings as the pandemic forced the Philippine economy into recession.
“Our strategic decision of further strengthening our office leasing business way before the pandemic started is now evidently making us more resilient,” he explained.
Leasing revenues from Megaworld Premier Offices, its office leasing arm, rose 10 percent to P5.6-billion compared to the same period last year.
Megaworld Premier Offices now accounts for 78 percent of its total rental income. This offset the impact from the company’s malls, which were shuttered when strict lockdown measures were implemented.
Tan added that many BPO companies in Metro Manila were shifting to locations outside the capital amid the pandemic.
“Our current portfolio of active BPO tenant partners is still huge, and these are our first-line takers in our provincial developments,” Tan said.
In its statement, Megaworld said it will complete five new office developments in its various townships.
These include the Iloilo Business Park in Iloilo City, Arcovia City in Pasig City, Westside City in Parañaque City, McKinley West and Uptown Bonifacio in Taguig City. The projects will add about 213,000 square meters of completed projects in the company’s leasable office portfolio.
To date, these projects are already 90 percent pre-leased on the average, Megaworld added.
Despite the boost provided by offices, Megaworld said rental income in the first semester of 2020 declined 11 percent to P7.2 billion. Real estate sales during the period also dropped 29 percent to P14.3 billion.
Megaworld, which developed Eastwood City in Quezon City, has 26 township projects across the country.
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