Frankly Speaking: Tip of the iceberg

This article first appeared in The Edge Malaysia Weekly, on May 25, 2020 - May 31, 2020.

Companies listed on Bursa Malaysia have up to June to release their financials for the quarter ended March 31, 2020. But those that have already done so offer an early indication of the carnage caused by the Covid-19 outbreak on businesses. Up to last Thursday, 110 companies that make up 40% of the local bourse’s market capitalisation had released their quarterly financials. Of these, 55% saw their earnings decline compared with the same period a year ago. On a quarterly basis, 71% saw a contraction. Me

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Companies listed on Bursa Malaysia have up to June to release their financials for the quarter ended March 31, 2020.

But those that have already done so offer an early indication of the carnage caused by the Covid-19 outbreak on businesses.

Up to last Thursday, 110 companies that make up 40% of the local bourse’s market capitalisation had released their quarterly financials.

Of these, 55% saw their earnings decline compared with the same period a year ago. On a quarterly basis, 71% saw a contraction.

Meanwhile, total sales for the 110 companies slipped 3.1% year on year and 8.5% quarter on quarter. Net profit plunged 40.6% y-o-y and 30.9% q-o-q.

Note that the Movement Control Order (MCO) was implemented on March 18, which means only two weeks of the impact from the restriction are captured by the latest quarterly reports.

This suggests that the numbers for the second quarter ending June 30, which would include five weeks of the MCO and the on­going conditional MCO, will be worse.

Consider the number of vehicles sold in April — only 141, compared with 49,935 units for the same month last year as automotive operations came to a standstill.

For the first time in its 55-year history, Genting Malaysia Bhd has shut its doors to guests at its casino and resorts, which remain closed.

Sime Darby Bhd CEO Datuk Jeffri Salim Davidson, in a press briefing, described the impact of the pandemic on businesses as the worst he has seen in his 35-year career.

Profit warnings are fast becoming the norm as companies caution against more pressure on their operating results in the months ahead amid uncertainty over the extent of the disruption caused by the MCO and ongoing CMCO.

Indeed, the first-quarter numbers are just the tip of the iceberg.

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