MRCB's Q3 profits impacted, expects to be stronger next year

Malaysian Resources Corporation Berhad (MRCB) has recorded revenue of RM847.8 million and profit before tax of RM32.5 million in the first nine months of 2019, compared to revenue and profit before tax of RM1.5 billion and RM114.1 million in the corresponding period in 2018.

The higher revenue and profit before tax recorded in 2018 was mainly due to one-off land sales of RM387 million, which contributed one-off pre-tax profit gains of RM66.8 million in that year, it said in a statement today.

The lower revenue and profit in the first nine months was also due to the group’s significant high-rise residential property projects still being in their early phase of construction, when revenue recognition is very minimal and a majority of the completed residential units sold during the period not yet recognised as they were still pending sales and purchase completion.

Income recognition from the LRT3 project was also considerably lower during the period as a result of its re-timing and remodelling from a project delivery partner (PDP) to a fixed price turnkey project.

Group managing director Imran Salim said: “This year is turning out to be a challenging year in terms of the timing of revenue and profit recognition, and these results mask the real progress we have made in 2019, and our RM1.7 billion unbilled property sales, which will begin to produce results in 2020”.

The company's property development and investment division recorded a lower revenue of RM371.4 million and operating profit of RM69.8 million in the first nine months, compared to RM882.9 million and RM88.9 million respectively in the corresponding period in 2018, which was largely due to one-off land sales in 2018 which contributed revenue and pre-tax profit of RM387 million and RM66.8 million respectively in 2018, the statement added.

Meanwhile, the engineering, construction and environment division recorded revenue of RM420.9 million and operating profit of RM3.3 million in the first nine months of this year.

The statement said that revenue was mainly contributed by MRT Line 2 Package V210, DASH Highway Package CB2, TNB HQ Campus, SUKE Expressway Package CA2 and Larkin Indoor Stadium.

"The lower operating profit was due to the lower revenue recognised during the period and the prudent expensing of certain costs while waiting for the completion of the final accounts of completed projects and the results of legal proceedings relating to certain projects."

MRCB said the group’s 50 percent-owned LRT3 project joint venture company contributed profit after tax of only RM1.24 million, compared with RM20.7 million in the corresponding period in 2018.

"As work on this project has now recommenced, the pace of profit recognition from the project will increase in 2020," it added.