Shangri-La 1Q net profit down 91% as pandemic takes toll on tourism

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KUALA LUMPUR (June 29): Shangri-La Hotels (Malaysia) Bhd, controlled by tycoon Robert Kuok, saw its first-quarter net profit fall 90.8% year-on-year as it was significantly impacted by worse operating results for its hotel businesses amid extremely challenging conditions due to the unprecedented disruption caused by the Covid-19 pandemic.

Net profit fell to RM2.03 million for the quarter ended March 31, 2020 (1QFY20) from RM22.12 million a year earlier.

Earnings per share dropped to 0.46 sen for 1QFY20 from 5.03 sen for 1QFY19.

Quarterly revenue was also 36% lower at RM88.47 million from RM137.36 million previously.

“During the quarter, extensive travel restrictions and lockdowns taken by governments worldwide, along with the movement control order (MCO) [in Malaysia], resulted in a sudden and steep slump in leisure and business travel. These factors inevitably led to material reductions in revenues, both from rooms and food and beverages across the group’s hotels,” it said in a filing with Bursa Malaysia today.

Going forward, Shangri-La said its hotel businesses remain “very difficult in a highly uncertain operating environment”.

The ongoing impact of Covid-19 on travel demand, it said, as well as the unprecedented uncertainties and challenges presented by the crisis will continue to put significant pressure on revenue and occupancy levels of the group’s operations in the near term.

“In response to the market downturn, comprehensive cost-saving measures and contingency plans have been implemented at every hotel. Further steps are also being taken to contain costs as well as to conserve cash and manage liquidity effectively.

“With the gradual easing of containment measures and travel restrictions, the group's hotels are stepping up their marketing efforts to drive up demand and business in the domestic travel market,” it added.

Shares in Shangri-La settled four sen or 0.95% lower at RM4.17 apiece with only 3,000 shares done. This gave the group a market capitalisation of RM23.31 billion.