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Thailand's MBK expects flat profit as rallies take toll
Publication Date : 10-04-2014
MBK Group expects sales revenue to rise by only 3 per cent with flat net profit this year, assuming the political protests continue until the middle of the year.
However, if the rallies drag on till the end of 2014, the group's worst-case scenario assumes flat sales revenue, or probably even a decline this year, while net profit could decline by more than 5 per cent.
Suvait Theeravachirakul, chief executive of MBK Group, said the group had earlier projected a 5-per-cent increase in revenue this year.
MBK Group operates diversified businesses, including a shopping centres, hotels, food, financial business, golf, and property.
MBK reported sales of 9.27 billion baht last year, up 11 per cent over 2012. Of the total, about 3.79 billion baht came from the shopping-centre business, 1.21 billion baht from hotel and tourism, 2.21 billion baht from food, 1.17 billion baht from the financial business, 382 million baht from golf, 329 million baht from property, and 160 million baht from others, including used-car auction and motorcycle dealerships.
The company posted 4.1 billion baht in net profit last year, up 2.2 billion baht or 117 per cent year on year.
"Due to the impact of the political situation and economic difficulties, we have delayed several projects, including 800-million-baht worth of improvements to the MBK Center - 500 million baht to be spent on an revamp of MBK Centre itself and another 300 million baht for a skywalk bridge," Suvait said.
Construction on the skywalk is to begin after Songkran.
The group has also suspended some projects, such as a hospital, to focus on the existing businesses.
MBK Group holds a 15-per-cent stake in Siam Piwat, which will develop a new mixed-use commercial complex, including a shopping centre on the banks of Chao Phraya River worth 35 billion baht. According to Suvait, the project has been delayed by three to four months. Construction was scheduled to start by the end of last year.
On Charoen Nakhon Road, the new project, a partnership between Siam Piwat and Charoen Pokphand Group, will consist of a shopping mall, condominiums and an office building aimed at attracting clients from Thailand and around the world. It is hoped that it will contribute to making Thailand a regional hub, especially when the Asean Economic Community comes into effect in 2015.
Suvait said the 49-day rally by the People's Democratic Reform Committee at the Pathumwan intersection had hurt MBK Group's two key businesses - MBK Center and Pathumwan Princess Hotel - costing them 50 million baht and up to 40 million baht respectively.
US$1 = 32.18