Frasers Property's management take pay cuts; Q2 net profit falls 38.1%

FRASERS Property's group chief executive, other members of senior management, as well as board members of the group and its subsidiaries, have taken base salary and fee cuts effective May 1, as the company looks to conserve its financial resources.

Group chief executive Panote Sirivadhanabhakdi took a 25 per cent reduction in his base salary, while other senior management accepted base salary cuts of up to 10 per cent.

Board members of Frasers Property and its subsidiaries also took a voluntary 10 per cent reduction in their directors' fees.

The move was announced on Wednesday along with the release of the property developer's financial results for the second quarter ended March 31, 2020. Frasers Property posted a 38.1 per cent drop in net profit to S$74.5 million, from S$120.4 million a year ago.

This comes as the company's administrative expenses and interest expense rose for the quarter, although it narrowed its cost of sales.

Earnings per share stood at 1.59 Singapore cents for the quarter, down from 2.81 cents a year ago.

Revenue for Q2 rose 2.2 per cent to S$954.7 million, from S$934.3 million a year ago. This was mainly due to settlements of development projects in China, maiden contributions from PGIM Real Estate AsiaRetail Fund's portfolio of retail assets, and the consolidation upon the step-up acquisition of Golden Land Property Development Public Company.

The revenue gains were partially offset by lower contributions from development projects in Australia and poorer operating results from hospitality properties due to the Covid-19 pandemic.

No dividend was declared for the quarter, versus an interim dividend of 2.4 Singapore cents a year ago. Frasers Property's board decided to temporarily suspend interim dividends as a precautionary measure to conserve the company's financial resources in view of "significant" uncertainties due to the Covid-19 situation.

For the half-year ended March 31, 2020, net profit was down 12.1 per cent to S$233.8 million, while revenue was up 5.7 per cent to S$2.13 billion.

"Frasers Property's H1 FY2020 results reflected only the initial impact of the Covid-19 outbreak on the group's financial performance," Mr Sirivadhanabhakdi said.

On its outlook with the virus situation in view, Frasers Property said the operating environment for its various businesses will remain challenging in the months ahead. This will have an impact on the group's business performance and inevitably its revenue and earnings.

To better weather the Covid-19 crisis, the group has made capital and liquidity management its strategic priorities. Cashflow management, collections and projects are a key focus.

The group is also taking appropriate action to reduce operational costs and defer uncommitted capital expenditure, it added.

Frasers Property shares were trading at S$1.19 as at 10.05am on Wednesday, down S$0.02 or 1.7 per cent.