This article first appeared in The Edge Financial Daily on February 22, 2018

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) expects earnings before interest, taxes, depreciation and amortisation (Ebitda) to grow 10% to RM2.09 billion in the financial year ending Dec 31, 2018 (FY18) from RM1.91 billion in FY17.

"The increase in group Ebitda will be in tandem with the expected growth in passenger traffic in Malaysia and Turkey," the airport operator said in a filing with Bursa Malaysia yesterday.

"Based on prevailing economic conditions and the additional airlines seat capacity offered, Malaysia passenger traffic in 2018 is expected to register 103.7 million movements, [up 7.3%] over the 96.6 million recorded in 2017.

"The international and domestic passenger traffic is expected to register 53.9 million and 49.8 million movements respectively," said MAHB.

"The 2018 traffic numbers are expected to be mainly contributed by China, India and Southeast Asia sectors, currently making up 75% of the international traffic," it added.

The number of passengers passing through the 39 airports that MAHB manages locally rose to a record 96.6 million last year, a growth of 8.7% over 2016, and surpassing the 90 million mark for the first time.

At the same time, MAHB is targeting the Istanbul Sabiha Gokcen International Airport in Turkey to register 34 million movements this year - with 12 million international and 22 million domestic movements. MAHB's wholly-owned subsidiary Sabiha Gokcen International Airport owns and operates the airport.

"2018 holds the promise of being another exciting year for MAHB," it added, noting that fuel cost, the single largest airline cost at 20% to 40%, is expected to remain close to current prices.

Meanwhile, higher costs dragged down MAHB's net profit by 16.4% to RM27.86 million in the fourth quarter ended Dec 31, 2017 (4QFY17) from RM33.32 million a year ago.

The higher total cost of RM155.1 million or 14.6% year-on-year - especially for operations in Malaysia - was mainly due to an increase in amortisation and depreciation of RM145.5 million, said MAHB.

This resulted in the airport operator posting a loss per share of 0.07 sen compared to an earnings per share of 0.49 sen in 4QFY16.

Quarterly revenue rose 15.4% to RM1.25 billion in 4QFY17 from RM1.08 billion in 4QFY16 on higher contribution from the airport and non-airport operations.

It also proposed a final dividend of eight sen per share for FY17, subject to shareholders' approval at the forthcoming annual general meeting.

For the full FY17, MAHB's net profit jumped 3.4 times to RM236.49 million from RM70.39 million the previous year. Revenue grew 11.5% to RM4.65 billion from RM4.17 billion in FY16.

MAHB shares closed 27 sen or 3.13% higher at RM8.89 yesterday, with a market capitalisation of RM14.57 billion.