This article first appeared in The Edge Financial Daily, on February 24, 2016.

KUALA LUMPUR: Fiamma Holdings Bhd plans to launch three property projects with a combined gross development value (GDV) of RM500 million this year, which are expected to bring in more than 10% of property sales to the group in the next three to four years.

Fiamma chief executive officer and group managing director Jimmy Lim said leading the launch is a 43-storey apartment project called East Parc @ Manjalara here, which has a GDV of more than RM300 million.

The other two projects feature shop houses and linked houses in Kota Tinggi, Johor and a serviced apartment development in Johor Baru, worth a combined GDV of RM180 million.

Lim expects the three projects to only contribute meaningfully to the group’s earnings in the next financial year ending Sept 30, 2017 (FY17).

For FY15, the property development segment accounted for 8.6% of the group’s revenue and 4.1% of pre-tax profit.

“We are not a full-time developer; we don’t launch projects every six months. This year, the market will slow down a bit, but we expect more sales over the next two to three years,” Lim said after the group’s annual and extraordinary general meetings yesterday.

Fiamma’s net profit declined 66.9% to RM2.57 million or 1.89 sen per share for the first financial quarter ended Dec 31, 2015 (1QFY16) from RM7.77 million or 5.68 sen per share a year ago, mainly due to lower contribution from the property development segment which recorded a pre-tax loss of RM880,000 compared with a pre-tax profit of RM5.09 million in 1QFY15.

Revenue also fell 18.4% to RM62.72 million from RM76.89 million in 1QFY15.

For 1QFY16, the trading and services segment accounted for 92.1% of Fiamma’s revenue and 99.2% of pre-tax profit.

Despite the weaker quarterly results, Lim said the group’s main focus would be to maintain market share rather than business growth. He said the economic downturn and the weak spending sentiment had not affected sales of its small home appliances, but he expects the market for big ticket items to slow down slightly.

Going forward, Fiamma expects performance for the coming financial year to remain challenging, especially for its trading and services segment as most of Fiamma’s purchases are transacted in US dollars.

Lim is of the view that the fluctuation of the ringgit against the US dollar — which had affected importers like Fiamma last year — will stabilise this year. On its part, Fiamma has renegotiated payment terms with suppliers and converted payments for certain purchases from US dollars to renminbi.

Fiamma shares closed one sen or 0.42% higher at RM2.41 yesterday, bringing a market capitalisation of RM330.37 million.