MEGAWORLD Corp. is cutting its capital expenditures (capex) this year to P36 billion as it reported a 9% profit decline due to the coronavirus disease 2019 (COVID-19) pandemic.

The Andrew L. Tan-led property developer said in a statement Monday it was originally planning a capex of P60 billion for 2020, but is now reducing it by 40% because of the outbreak.

The pandemic has pushed Megaworld’s attributable net income lower by 9% to P3.5 billion in the first quarter. Its net income fell 8% to P3.8 billion, and its core profit was down 3% due to a non-recurring gain of around P189 million.

Consolidated revenues stood flat with a 1% improvement to P15.1 billion. Revenues from the residential business comprised 64% of the total, the rentals business accounted for 28%, the hotels business made up 4% and the remainder are from non-core businesses.

Residential sales were steady at P9.6 billion as growth was stunted by the Taal Volcano eruption in January, resulting in lower sales for projects in the Calabarzon region. Supply chain disruption due to the COVID-19 pandemic also delayed project construction and affected the business.

Megaworld’s rental segment was another business that cushioned it during the quarter, posting a revenue growth of 8% to P4.2 billion. The company attributed it to office leases as mall rentals were lower due to the pandemic.

Much of the decline came from hotel operations, which posted a 4% revenue drop to P551 million. The impact of the pandemic to global tourism resulted in lower check-ins during the period, particularly from international guests.

“Our real estate sales still helped mitigate the impact of the challenges we faced during the quarter. Our office portfolio, which remains very attractive to locators because they are mostly PEZA- accredited, provided a buffer against the expected weakness of our mall and hotel operations,” Megaworld Chief Strategy Officer Kevin L. Tan said in the statement.

“We keep an eye on effective strategies that will cushion the impact of these challenges for the rest of the year,” he added.

One of the company’s coping mechanisms is strengthening its e-commerce platforms to adapt to new behaviors emerging from pandemic-related restrictions. Megaworld will be rolling out digital platforms in the coming weeks to facilitate customer activity.

An example is its mobile application “E-Concierge”, which is made for Megaworld’s hotel business to allow guests to communicate with hotel staff without contact.

“Our e-commerce platforms will give our customers the convenience and comfort that they need as we take their safety and well-being to a whole new level. We will also do the same for our mall customers, which will also greatly help our retail tenants,” Mr. Tan said.

Megaworld currently has 26 integrated urban townships, integrated lifestyle communities and lifestyle estates in its portfolio.

Shares in the company at the stock exchange fell 12 centavos or 3.99% to P2.89 each on Monday. — Denise A. Valdez