Paramount\'s 1Q earnings tumble 58.21% on lower property sales

KUALA LUMPUR (May 12): Property developer Paramount Corp Bhd saw its net profit plunge 58.21% to RM9.69 million in the first quarter ended March 31, 2016 (1QFY16) from RM23.19 million a year ago, due to dented sales in its property division.

For the same reason, its revenue declined 31.22% to RM113.33 million in 1QFY16 from RM165 million in 1QFY15, its bourse filing yesterday showed.

Paramount said its property division’s profit before tax (PBT) dropped 58% to RM12.1 million in 1QFY16 due to a significant fall in revenue, due to lower progress billings and sales of its Sejati Residences in Cyberjaya, Utropolis in Glenmarie, Shah Alam, and Sekitar26 Business in Shah Alam developments. Lower sales were also seen at the group’s Bukit Banyan development in Sungai Petani.

The company’s education division, on the other hand, recorded a 67% jump in PBT to RM10.2 million from last year, on higher student enrolment and a RM2.3 million gain from the sale of student accommodation apartments, after KDU University College moved to its new campus in Glenmarie, Shah Alam. The division recorded a 7% increase in revenue to RM38.6 million from RM36.1 million in 1QFY15.

On prospects, it said the property market is not likely to recover any time soon from its current slump. As such, its property division is moving to broaden its offering of affordable homes.

It is also finalising plans for the roll-out of its Batu Kawan development in Penang, which will mirror its Utropolis Glenmarie project, a university metropolis.

It expects its tertiary education business to continue seeing intense competition as competitors are offering significant tuition fee reductions, while more schools are opening up in the primary and secondary segments.

This article first appeared in The Edge Financial Daily