Office leasing boosts Megaworld earnings

Tycoon Andrew Tan-led property developer Megaworld Corp. delivered P2.6 billion in second quarter net profit, rising at a double-digit pace from the levels a year ago and a quarter ago, driven mostly by the office leasing business.

Megaworld’s second quarter net profit rose by 39 percent versus a low base of P1.9 billion last year at the height of the pandemic-related lockdowns. Despite the return to tight lockdown in early April, its bottom line also improved by about 10.2 percent in the second quarter from the first quarter level of P2.36 billion.

For the first six months, Megaworld’s attributable net income declined by 7 percent to P5 billion year-on-year. “We attribute the steady recovery of our businesses to our ability to identify opportunities amid the pandemic, as we continue to focus our efforts to create products and services that meet the evolving needs of our customers. While everything remains uncertain as far as the impact of the Delta variant will affect business in the coming months, we remain hopeful that the increasing number of vaccinated Filipinos will help sustain consumer confidence henceforth,” Kevin Tan, chief strategy officer at Megaworld, disclosed to the Philippine Stock Exchange on Thursday.

Consolidated revenue in the first semester reached P22.2 billion, lower than its P23.79 billion top line in the same period last year. Excluding the impact of interest and other income, the company’s core revenues amounted to P20.6 billion in the first half.

Rental revenue declined by 13 percent year-on-year to P6.3 billion during the first half.

For the six-month period, real estate sales revenue amounted to P13.5 billion, down by 5 percent year-on-year, while reservation sales ended flat at P37.2 billion during the same period.

Hotel revenues also declined by 21 percent year-on-year to P724 million as travel restrictions remained in place.

For the second quarter alone, Megaworld’s core revenue grew by 20 percent to P11.2 billion, driven by the recovery across various business segments.

Rental income sequentially increased by 4 percent to P3.2 billion during the second quarter, with Megaworld Lifestyle Malls improving its rental income by 5 percent to P537 million, sustaining the recovery trend seen since the third quarter of 2020. The mall business rolled out initiatives to encourage foot traffic and expand online sales channels as the lockdowns were eased. It also continued supporting its retail tenants by waiving rental fees since last year.

Megaworld Premier Offices, on the other hand, reported a 4 percent increase in its rental income during the quarter to P2.7 billion. The company sees bright prospects for this segment, driven by the business process outsourcing sector which makes up the bulk of Megaworld’s office locators.

Megaworld Hotels & Resorts likewise posted a 16-percent growth in its hotel revenue to P389 million during the quarter, driven by the the company’s in-city hotels and the opening of Kingsford Hotel in Westside City last March.

Second quarter real estate sales revenues grew by 29 percent to P7.6 billion as construction activities improved.

—Doris Dumlao-Abadilla INQ