Berjaya unit suffers 40% profit drop, nears buyout of car dealer

MANILA, Philippines - Depressed revenues and higher operating expenses weighed down the performance of the local unit of Malaysian conglomerate Berjaya Corp. Bhd. in the first quarter of its fiscal year.

In a regulatory filing, Berjaya Philippines Inc. said its profits sank 40 percent to P217.09 million in the May to July period from P367.35 million a year ago.

Revenues, derived from rental of lottery machines and hotel operations, slipped 8.44 percent to P493.19 million from P538.67 million.

Lower revenues resulted from “decreased gross receipts from lottery ticket sale,” Berjaya Philippines said.

Specifically, rental revenues eased nine percent to P458.97 million from P505.9 million. In contrast, its hotel operations posted P34.21 billion in revenues, up from P32.77 million last year.

Berjaya’s subsidiary Philippine Gaming Management Corp. provides computers and online lottery equipment for the Luzon operations of the Philippine Charity Sweepstake Office (PCSO). It is entitled to rentals equal to a certain percentage of the gross receipts from all ticket sales of PCSO.

For hotels, Berjaya Philippines through subsidiary Perdana Hotel Philippines Inc. acquired in 2010 a 212-room hotel that was previously named Best Western Astor Hotel. It now operates as Berjaya Hotel located in Makati.

Berjaya Philippines said its performance was also dragged by higher expenses, which surged a third to P288.38 million from P215.82 million last year.

“Increased in operating expenses resulted mainly from the subsidiaries,” Berjaya Philippines said. It said it spent more on professional fees, salaries and employee benefits, maintenance of computer equipment, charitable contribution, cost of food and beverages and other general and administrative expenses.

In a separate disclosure, Berjaya Philippines said there is already a breakthrough in its bid to acquire a British luxury car dealer.

“Following the increased share offer, the board of H.R. Owen has recommended that shareholders accept the increased cash offer,” Berjaya Philippines said, adding that the directors themselves committed to sell their shares.

To date, Berjaya Philippines own 9.8 million shares or 41.5 percent of H.R. Owen.

Last week, Berjaya Philippines sweetened its offer to take over the London-based luxury car distributor. The company increased its offer to 170 pence per share, valuing H.R. Owen at 43.2 million pounds (around P2.99 billion) compared with the previous 130 pence each for a total 32.5 million pounds (around P2.25 billion).

In June, Berjaya Philippines expanded its car dealership business by acquiring 29.81 percent of H.R. Owen for P540.36 million as a long-term investment in line with its diversification strategy.

H.R. Owen is involved both sales and aftersales of brands like Aston Martin, Audi, Bentley, BMW, Bugatti, Ferrari, Lamborghini, Lotus, Maserati, Mini, Pagani and Rolls-Royce, predominantly in London.

The local unit of the Malaysian conglomerate is diversifying its income source. Its first venture into car dealership is through Mazda. Berjaya Philippines is the sole distributor of Mazda vehicles, parts, and accessories in the Philippines.

In February, Berjaya Philippines spent more than $7.48 million to buy two percent of Atlan Holdings Berhad, a property firm and duty free retailer in Malaysia. The listed company is also holding Atlan’s shares as a near term investment.