Eco World International slips into the red in 4Q on share of losses in joint ventures, higher finance cost

KUALA LUMPUR (Dec 16): Eco World International Bhd (EWI) sank into the red for the fourth quarter ended Oct 31, 2021 (4QFY21) with a net loss of RM56.26 million or 2.34 sen per share, versus a net profit of RM17.44 million or 0.73 sen per share a year earlier.

The group said this was mainly due to share of losses in joint ventures, and higher finance cost following cessation of capitalisation of finance cost on general borrowings in tandem with the handover of apartment units in Yarra One in Melbourne.

Quarterly revenue dropped 39.45% to RM34.75 million in from RM57.38 million in 4QFY20, the group’s bourse filing showed.

“The revenue arose from West Village and Yarra One following progressive handover of units sold to customers and fees for marketing services rendered by a subsidiary to the group’s joint venture in respect of property sales of its projects in the UK,” said EWI.

On a quarter-on-quarter basis, EWI’s net loss in 4QFY21 compares with a net profit of RM2.49 million in 3QFY21, as revenue plunged 72.67% from RM127.13 million.

For FY21 as a whole, EWI’s net profit plummeted 83.11% to RM13.57 million, from RM80.33 million in FY20.

Full-year revenue declined 14.9% to RM572.71 million from RM672.99 million.

In a statement, EWI said it recorded RM1.377 billion sales in FY21, close to the RM1.382 billion sales achieved in FY20.

“Gross profit of RM120.1 million was recorded for FY21 following completion and handover of units sold to customers on its Australian projects, an increase from the RM99.99 million recorded in FY20.

“Share of results in joint ventures was lower at RM47.2 million vs RM176.8 million achieved in FY20. This is partly due to additional incentives given to purchasers of completed units within the EcoWorld-Ballymore portfolio and higher commissions paid to agents to accelerate sales after the expiry of the UK stamp duty holiday in June 2021,” it added.

EWI president and CEO Datuk Teow Leong Seng said: "Although FY21 was a challenging year for EWI as lockdowns, border closures and higher stamp duties following the expiry of the UK stamp duty holiday in June 2021 adversely impacted property demand, we expect FY22 to be a much better year for property sales in London."

He said the group’s strategies to offer additional incentives to purchasers and higher commissions to agents to accelerate the clearance of stock was effective in sustaining its sales rate in the fourth quarter of 2021.

“In FY22 we will continue pursuing the strategic decision made in FY21 to prioritise cash generation. Accordingly, we have set a higher sales target of RM2 billion to be achieved for FY22.

“As at Nov 30, 2021, one month into FY22, we have already secured RM116 million sales and we expect sales interest to continue picking up in the ensuing months,” Teow said.

EWI’s shares closed unchanged at 43.5 sen, giving the group a market capitalisation of RM1.04 billion. It saw some 224,400 shares transacted.

Edited by S Kanagaraju

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