Eco World International Bhd posted a net loss of RM14.13 million for the second quarter ended April 30, 2024, compared to RM4.56 million in the same period a year earlier on lower gross profit. There was an impairment loss of RM10.77 million on the amount owed by its joint venture company.

KUALA LUMPUR (June 19): Eco World International Bhd (KL:EWINT) has widened its net loss to RM14.13 million for the second quarter ended April 30, 2024 (2QFY2024) compared to RM4.56 million in the same period a year earlier.

The wider net loss was primarily due to a lower gross profit, as most of the stock in its Australian projects has been sold.

Additionally, there was an impairment loss of RM10.77 million on the amount owed by its joint venture company, EcoWorld London as well as lower foreign exchange gains as the British pound appreciated against the Malaysian ringgit.

Quarterly revenue dropped 99.33% to RM151,000 from RM22.7 million as there were no units sold and handed over to customers of projects in Australia following the sell-out of all residential units, leaving just two commercial units unsold.

Nonetheless, the group declared a first interim single tier dividend of six sen per share, which translates to RM144 million, to be paid on July 24.

For the cumulative six months ended April 30, the group trimmed its net loss to RM13.95 million from RM35.38 million amid lower finance cost, higher forex gains and lower losses from Eco World London.

Revenue for the six months fell by 29.39% to RM31.82 million, compared to RM45.07 million, as all residential units in West Village and Yarra One were sold during the period.

In a statement, EWINT’s president and chief executive officer Datuk Teow Leong Seng said that construction costs in the UK have continued to climb despite softening home prices in the recent months.

“Given the uncertainties related to policy direction as the UK heads to a general election in July 2024 and market expectations of rate cuts in the later part of 2024, homebuyers will take longer time to transact as they wait for policy clarity and lower mortgage rates. As such, the current environment remains unconducive for the group to undertake launches in the near term,” he said.

Teow stated that the group is closely monitoring market conditions and exploring strategies to enhance the profitability of its ongoing projects. "The group will proceed with launches when cost pressures stabilise and the expected returns of undertaking such launches can be forecast with greater certainty”.

As of the end of May, the group recorded RM433 million in sales exchanges and reserves of RM85 million, bringing the total to RM518 million. Embassy Gardens led contributions with RM166 million in sales, followed by Wardian with RM153 million, and Millbrook Park with RM41 million.

“As at May 31, sales are on track and we have reduced the value of unsold completed stocks to about RM400 million of which the group’s effective share is approximately RM300 million. The board is maintaining our target of generating excess cash of up to RM500 million by selling our completed stocks.

“Such excess cash will be distributed to shareholders in tranches over 2024 and 2025, with the first tranche amounting to RM144 million to be paid in July 2024, following the declaration of the six sen first interim dividend to shareholders by the board in 2QFY2024,” Teow added.

At Wednesday’s closing bell, shares of EWINT were unchanged at 40 sen, giving it a market value of RM948.29 million.