IOI Properties posts weaker 1QFY2025 net profit as interest expense eats into margins

• The property investment segment recorded operating profit of RM133.4 million, which was RM61.8 million or 86% higher compared with the same quarter last year.

KUALA LUMPUR (Nov 26): IOI Properties Group Bhd’s (KL:IOIPG) net profit fell 60.3% in the first quarter from a year earlier, no thanks to higher interest expense.

The group recorded net interest expense of RM97.1 million during the quarter ended Sept 30, 2024 (1QFY2025), compared with net interest income of RM13.9 million in the corresponding quarter.

The higher interest expense follows the completion of IOI Central Boulevard Towers in April 2024, IOIPG said in a filing to Bursa Malaysia on Monday.

Net profit for the three months ended 1QFY2025 was RM69.17 million, down 60.35% compared to RM174.45 million over the same period a year earlier.

Revenue for the quarter, meanwhile, rose 6.14% year-on-year to RM687.85 million from RM648.05 million, helped by improved performance in the property investment segment and hospitality and leisure segment.

Earnings per share dropped to 1.26 sen from 3.17 sen last year. No dividend was declared for the quarter under review.

The property investment segment recorded operating profit of RM133.4 million, which was RM61.8 million or 86% higher compared with the same quarter last year.

“The robust financial performance in the current year quarter is primarily bolstered by the recurring lease income derived from IOI Central Boulevard Towers in Singapore following the receipt of its Temporary Occupancy Permit (TOP) Phase 1 in April 2024 and record performance contribution from IOI City Mall,” said IOIPG.

Meanwhile, its hospitality and leisure segment saw operating profit shift from a RM4.3 million loss last year to a profit of RM6 million during the quarter under review. The improved financial performance reflected an increase in the segment’s revenue during the quarter, driven by an expansion of its hospitality sub segment portfolio, the group said.

Revenue of the hospitality and leisure segment more than doubled to RM110.7 million from RM48.8 million, driven by contributions from the newly acquired W Kuala Lumpur and the opening of Moxy Hotel in February 2024, as well as the newly acquired Courtyard By Marriott Penang in July.

The group said that it remains focused on reducing its completed inventories, after reducing this to RM1.74 billion in 1QFY2025. The group will need to take on strategic product positioning and promotional sales campaigns to reduce its inventories further, it said.

IOIPG has planned launches featuring a diversified range of products, including residential, commercial and industrial offerings.

In Klang Valley, notable planned launches include the upcoming phase at the IOI Industrial Park in Banting, featuring a variety of products, including cluster, semi-detached and bungalow factories, which is slated for a fourth quarter launch.

“The development forms part of the recently introduced IOI Industrial Park Series, encompassing industrial parks in Iskandar Malaysia in Johor, Banting in Selangor, and Melaka.

“Capitalising on the strong demand, this initiative is aimed to strengthen our industrial offerings and position the segment as a key contributor in the coming years and over in Johor, launches will focus on our townships at Taman Kempas Utama, followed by Bandar Putra Kulai, Bandar IOI Segamat and Taman Lagenda Putra,” it added.

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