This article first appeared in The Edge Financial Daily on December 14, 2018

KUALA LUMPUR: IJM Corp Bhd, which posted an 81% fall in net profit to RM21.92 million for the second quarter of its financial year 2019 (FY19), is bracing for a challenging year in view of the slowdown in the construction sector and the continued soft property market, according to its managing director and chief executive officer Datuk Soam Heng Choon.

“This is time for consolidation as the construction sector is facing a slowdown due to [fewer] jobs from government projects and a slower property market”, Soam told the press yesterday.

For IJM Corp in particular, Soam said the group would also have to contend with a volatile foreign exchange (forex).

“It (IJM Corp’s earnings) depends on the forex, and [the group] needs to look at core profit and how its [core profit] is affected by the forex, or [any] one-off item,” Soam said.

Nonetheless, Soam said the group’s total construction outstanding order book of RM8.8 billion will continue to provide earnings visibility for the next three years. “A lot of projects [in our order book] are in the early stages. Once we come out with the foundation, progress will be much faster, then recognition of profit and turnover will also be better,” Soam said.

Some of those early-stage projects are the group’s construction of the headquarters of both Affin Bank Bhd and HSBC Bank Malaysia Bhd at the Tun Razak Exchange, UOB Properties (KL) Bhd’s office tower at Jalan Raja Laut, and the Bukit Bintang City Centre’s mall.

When the group’s 2QFY19 results were announced on Nov 26, the group blamed the fall in earnings to lower revenue and higher forex losses. Its net unrealised forex loss rose to RM33.5 million from RM400,000 a year earlier, while revenue fell 18% to RM1.31 billion from RM1.6 billion, as the group’s construction, property development, manufacturing and quarrying, as well as plantations divisions posted lower contributions.

Soam was speaking at the launch of the 2.8km Pantai Sentral Interchange, which had opened for traffic since 6pm yesterday. The interchange is a joint venture project between IJM Land Bhd and Amona Development Sdn Bhd, the joint developers of Pantai Sentral Park.

With a total investment of RM98 million, the interchange connects the development to the New Pantai Expressway (NPE). It also complements the road networks serving Bangsar South, Pantai Hill, Kerinchi and Pantai Dalam areas.

“We are confident the dedicated access points will provide thousands of road users and commuters a more direct access to and from the NPE, redistributing traffic flow and encouraging [smoother] traffic within the area,” Soam said.

“The opening of the interchange also signifies an important milestone in the integrated planning of the Pantai Sentral Park township, before the first handover of homes [in] its first phase of development, Inwood Residences.

“With 211 units, Pantai Sentral Park will be welcoming their first batch of residents in the first quarter of 2019, fulfilling its promise that the township would come with desired connectivity, accessibility, amenities and infrastructure before residents move in,” Soam added.