Aeon to shut down Index Living Mall stores

PETALING JAYA: Aeon Co (M) Bhd’s net profit plunged 64.5% to RM9.79 million for the second quarter ended June 30 compared with RM27.55 million in the previous corresponding period, due to the recognition of impairment loss on investment in its associate company Index Living Mall Malaysia Sdn Bhd (ILMM).
Its revenue however, rose 5.4% to RM1.06 billion from RM1.01 billion.
Aeon said in a filing with the stock exchange that ILMM will be closing down the remaining of its furniture outlets in Malaysia by the third quarter of 2018. The outlets are located at Aeon Shah Alam and Kota Baru, IOI City Mall, Putrajaya as well as Aeon Mall Tebrau City, according to its website.
“As such, for the second quarter result, the company has recognised the impairment loss on its investment in the associate company which amounted to RM8.01 million and also share of its year-to-date operating loss which amounted to RM13.7 million.”
ILMM is a 49:51 joint venture company between Aeon and Index Living Mall Company Ltd which was incorporated in Thailand.
Aeon said the outlet closures are expected to reduce its earnings per share and net assets per share by about 2 sen for the financial year ending Dec 31.
For the first six months of the year, the group’s net profit contracted 29.8% to RM37.73 million from RM53.75 million on the back of a 4.4% rise in revenue to RM2.18 billion from RM2.09 billion.
Looking ahead, Aeon said the sales and services tax implementation will have an impact on consumer spending and product pricing.
“With such outlook, the board expects the performance for the current year to remain challenging.”
For the retail business, the group said it will continue to refurbish its selected stores and employ appropriate marketing and pricing strategies.
Meanwhile, Aeon foresees the occupancy and rental rates for the property management services to remain stable and sustainable.
Aeon’s share price closed unchanged at RM2.10 on 590,400 shares done.