Robinsons Land Corp. (PSE: RLC), one of the leading diversified real estate companies in the Philippines, posted an 8% decline in net income to PHP3.7 billion from PHP4.0 billion in 1H CY2020 as the country continues to curtail the spread of the global pandemic, COVID-19 during the said period.
For the first six months ended June 30, 2020, RLC’s consolidated revenues marginally increased by 3% to PHP15.4 billion from PHP15 billion, while overall EBITDA grew by 1% to PHP8.2 billion from PHP8.1 billion in the same period. Consolidated EBIT was down by 2% to PHP5.6 billion in the said period.
The full impact of the pandemic was felt during the 2nd quarter of the year which substantially affected RLC’s business units. The Investment portfolio which accounts for 49% of consolidated revenue was down by 25% to PHP7.5 billion during the first half of 2020 versus PHP10.0 billion in the same period last year. However, the development portfolio managed to surge by 59% to PHP7.9 billion in the first half of the year with the new Residential accounting treatment. Without the adjustment, residential revenue is down by 51% in the said period.
As of June 30, 2020, RLC’s financial position remains solid with over PHP18.1 billion of cash, and net gearing ratio further improved to 0.33x. Total assets stood at PHP209.1 billion while Shareholders’ Equity was at PHP101.4 billion.
“Even with the full impact of the quarantine in the second quarter, all our business units managed to be EBITDA positive. Moving forward, the improving trend gives us optimism that the economy is on its way to recovery. We continue to seek opportunities and innovative new ways of doing business to deliver long-term sustainable value to all our stakeholders,” said RLC President and CEO Frederick D. Go.
RLC’s Malls Division revenues in the first six months posted a decline of 42% to PHP3.8 billion while EBITDA was down by 37% to PHP2.7 billion. This is mainly because of waived rentals for non-operational tenants and rental discounts provided during the start of the quarantine period in March. During this period, RLC’s Mall Division strengthened its on-line and e-commerce platforms in support of its tenants’ operations. RPersonal Shopper and RDelivery online apps were created, bringing Robinsons malls closer to customers’ doorsteps. Moreover, the division developed a last mile strategy for customer convenience by assigning pick-up stations, which allow customers to place orders online and have the items delivered straight to their vehicles at an arranged time and pick-up station number within the mall. No new malls were opened during this period.
The Office Buildings Division is one of RLC’s most stable divisions for the period as it registered the highest growth in the investment portfolio. Revenue increased by 23% to PHP2.9 billion from PHP2.4 billion in 1H CY2019 mainly because of the successful leasing activities in Cyber Sigma in BGC, Zeta Tower and Exxa Tower in the Bridgetowne Estate, Cyberscape Gamma in Ortigas and work.able centers in Gamma, Exxa and Zeta. EBITDA surged by 30% to PHP2.6 billion while EBIT in the first six months of the year increased by 34% to Php2.2 billion. The Office Buildings division now has operational sites with locations in the cities of Pasig, Quezon, Taguig, Mandaluyong, Makati, Cebu, Davao, Naga, among others.
Robinsons Hotels and Resorts Division (RHR) was the second business unit that was heavily affected by the implementation of quarantine regulations and protocols. In the first half of CY2020, RHR posted a 39% decline in revenues to PHP660.4 million due to the restrictions on guest accommodations from the start of the community quarantine and the disruption brought about by the Taal Volcano eruption in January. As a result, RHR’s EBITDA dropped by 68% to PHP95.2 million. During the pandemic period, the strong demand for RHR came from OFW and Balikbayan quarantine requirements as well as long-staying accommodations for BPO employees. In addition to these current offerings, RHR has turned some of its hotel rooms into private working spaces and has offered long-stay services to address changing consumer demand amid the pandemic.
RLC’s Industrial and Integrated Developments Division (IID) warehouse business remains resilient. In the 1st half for the year, IID’s warehouse revenues surged by 97% to PHP112.1 million driven primarily by its two warehouse facilities in Sucat, Muntinlupa and in Calamba, Laguna. Warehouse EBITDA and EBIT rose by more than 10 folds each to PHP52.2 million and PHP25.4 million respectively. IID has 77,000 sqm of gross leasable space and continues to build more warehouses to increase its portfolio. For the development portion, IID’s revenue decreased by 71% to PHP74.1 million as it recognized a deferred gain on sale to joint venture entity, Shang Robinsons Properties Inc.
The Residential Division recorded Php7.9 billion revenue in the first half of 2020, 66% higher from Php4.7 billion in the same period last year. EBITDA and EBIT accelerated by 100% and 103% to PHP2.7 billion and PHP2.7 billion, respectively. RLC’s sales take-up for the first six months declined by 52% to Php4.7 billion primarily due to the quarantine protocols in place. Three new projects worth PHP10 billion launched during the period are Sapphire Bloc South in Ortigas Center and Sierra Valley Gardens buildings 1 & 2 located in Cainta, Rizal.
China business one of the best performing units
Overseas, the Chengdu Ban Bien Jie project is doing remarkably well. During the first six months of the year, RLC was able to acquire the sales permits for the second batch of condominium units and duplexes, and all such residential units were sold out.
Capex was controlled to a minimum
For the calendar year-to-date, RLC spent only PHP7.4 billion of capital expenditure or 30% of the planned PHP24 billion for the Philippine operations in CY2020 for the development of malls, offices, hotels and warehouse facilities, and construction of its residential projects. No new land acquisitions were made in the 2Q CY2020. The company continues to search for properties to acquire all over the country for the expansion of its many businesses. RLC is also open to engage with property owners and developers to do joint venture projects.