KUALA LUMPUR (Aug 28): IJM Corp Bhd’s net profit for its first quarter ended June 30, 2018 (1QFY19) fell by close to half to RM62.76 million from RM121.17 million a year ago, as it booked in higher net unrealised foreign exchange losses.
Quarterly revenue fell a marginal 1.2% to RM1.44 billion from RM1.46 billion a year ago, tracking lower contribution from its construction, manufacturing & quarrying, plantations and infrastructure divisions.
In an exchange filing today, the group said earnings came in lower for the quarter under review due to an increase in net unrealised forex losses of RM71 million — mainly for its construction, infrastructure, and plantation segments — as opposed to a loss of RM3.6 million in 1QFY18.
Its manufacturing & quarrying business saw lower sales volumes and margins especially in the piles and quarrying sectors, while cargo throughput handled by the group’s port concession too fell by 28%, impacting its infrastructure segment.
The group’s plantation business too was hit by lower commodity prices, despite increased crude palm oil sales volume.
Only its property development segment showed growth in both revenue and earnings following higher work progress and completion of some projects in the current quarter.
On prospects, IJM said it expects a reasonable FY19 performance, on the back of its outstanding construction order book of RM8.8 billion and unbilled property sales of RM2 billion.
“The local property market is expected to remain challenging despite improving consumer sentiments. The key issues of price affordability, the overhang of high-priced properties, rising costs of living and tight financing continue to have a dampening effect.
“Nonetheless, the property development division remains steadfast in its efforts to grow its business in view of the strategic locations of its properties and the brand premium that it has established,” it said.
It said it also expects a reasonable performance from its industry division, based on its order book position whilst intensifying efforts to improve operating margins, despite challenging operating environment both domestically and overseas.
IJM Corp’s plantation division however could face challenges, due to the volatility of commodity prices, foreign exchange rates, higher borrowing costs, and lower start-up yields whilst incurring full plantation maintenance costs and overheads.
“The group’s toll and port operations continue to provide recurrent revenue streams as existing toll concessions mature thereby further enhancing the earnings of the group’s Infrastructure division,” it added.
Shares in IJM Corp today closed three sen or 1.58% higher at RM1.93, giving it a market capitalisation of RM7.01 billion.