Parkson's 3QFY15 net profit plunges on hefty provision for arbitral award

by **Cals** Wed 27 May 2015, 19:31

Parkson's 3QFY15 net profit plunges on hefty provision for arbitral award

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By Yen Ne Foo / theedgemarkets.com | May 27, 2015 : 6:39 PM MYT

KUALA LUMPUR (May 27): Parkson Holdings Bhd (Parkson) saw its net profit slumped to RM2.96 million in the third quarter ended Mar 31, 2015 (3QFY15), from RM55.06 million achieved in the corresponding period last year, after making a RM82.39 million provision for an arbitral award.

Parkson had already warned shareholders in April 2015, that its earnings would be visibly hit in 3QFY15, after it lost a property dispute, i.e. Metro City Shopping Plaza in Beijing. Its subsidiary [size=14]Parkson Retail Group Ltd (PRGL)was found to have occupied premises, after the termination of the latter’s tenancy agreement. PRGL was required to pay RMB140.4 million yuan to Metro City.

The lower net profit came on the back of a 9.4% increase in the company’s revenue during the quarter under review, from RM957.95 million to RM1.05 billion.

The retailer’s operating profit was also down sharply to RM93.9 million in 3QFY15, against RM131.5 million in the previous corresponding quarter.

Parkson said in a filing with Bursa Malaysia that higher revenue during the quarter was due to higher consumer spending during Chinese New Year festivities, and prior to the implementation of the goods and services tax in Malaysia.

After a dismal third quarter, Parkson has cautioned investors that its performance may not pick up in the final quarter of financial year ending June 30, 2015 (FY15).

It said, "The group’s retailing operations in China and the Southeast Asian region are anticipated to remain challenging in the near future. This, coupled with the absence of major festivities, a seasonal lower performance is expected in the coming quarter."

Notwithstanding, Parkson saw its revenue and net profit grown during the cumulative nine-month period.

Net profit in the first nine months was up by 20%, from RM111.39 million to RM133.76 million, while revenue was higher by 5.1%, from RM2.74 billion to RM2.88 billion.

Basic earnings per share (EPS) for 3QFY15 shrank to 0.29 sen, from 5.25 sen a year ago. This brings EPS in the nine-month period to 12.63 sen — an increase from 10.43 sen seen in the same period a year ago.
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