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Straco Corp swings into S$3.4m net loss for Q1, now on cost-cutting drive
MAINBOARD-listed Straco Corporation swung into a net loss of S$3.4 million for the first quarter, from a S$8.5 million net profit previously, as the Covid-19 pandemic forced its tourist attractions to close temporarily.
Revenue for the quarter ended March 31 fell 86.2 per cent on the year to S$3.4 million, as the group's attractions in China have been hit with temporary closures since late January.
The group’s Singapore Flyer attraction was also in the red, as rides on it have been suspended since last November because of a technical issue. The attraction was in operation for only 12 days in March.
Straco said it expects to report a material operating loss and negative operating cash flow for the first half of FY2020. The financial results are to be announced in August.
"Precautionary measures such as safe distancing, operating with reduced daily capacity and travel restrictions will have an adverse impact on revenue. Like all operators in the tourism industry, we will be remodelling our processes and right-sizing our operating resources to cater to the reduced demand," Straco added.
The group has cut costs. This has included trimming wages; members of the head-office senior management have been taking the biggest pay cuts of 30 per cent to 50 per cent since the start of April.
Its subsidiaries have implemented no-pay leave, pay cuts, wage freezes as well as headcount freezes.
To further conserve cash, Straco has been allowed by DBS to defer its monthly loan principal repayment on the Singapore Flyer starting from April till the end of the year.
Straco's counter closed unchanged at S$0.505 on Thursday.