MMC 4Q net profit up 60% on contribution from Penang Port, MRT works

This article first appeared in The Edge Financial Daily, on February 28, 2019.
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KUALA LUMPUR: MMC Corp Bhd’s net profit surged 59.8% to RM119.72 million or 3.9 sen per share for the fourth quarter (4Q) ended Dec 31, 2018, from RM74.91 million or 2.5 sen per share in the previous year’s corresponding quarter.

In its filing with Bursa Malaysia, it attributed the improved performance to the full consolidation of Penang Port Sdn Bhd’s results, higher contribution from the Sungai Buloh-Serdang-Putrajaya mass rapid transit Line 2 (MRT2), no share of losses from Zelan Bhd and higher share of profit from Malakoff Corp Bhd.

Malakoff, in which MMC holds a 37.6% stake, saw better contribution at its coal plants, lower depreciation, lower maintenance and finance costs, as well as higher contribution from associates.

Revenue for the quarter jumped 28% to RM1.59 billion from RM1.23 billion a year earlier.

For the full year, net profit increased 4.9% to RM220.08 million from RM209.79 million in the previous year, while revenue rose 20% to RM5.01 billion from RM4.16 billion.

Segmentally, all four of the group’s business segments — ports and logistics, energy and utilities, engineering and investment holding — posted higher revenue for the year.

However, profit contributions from ports & logistics and energy and utilities segments were lower year-on-year, while the investment holding segment saw higher loss before tax for the year.

Only the engineering segment saw an increase in profit contribution due to works progress for the MRT 2 Line and the absence of a one-off provision for impairment in the Storm Water Management and Road Tunnel project which was recorded in the previous year.

Going forward, the group said its ports and logistics division is expected to see positive volume growth across all its ports.

“The completion of the acquisition of the balance 51% interest in Penang Port in May 2018 will reflect its full-year contribution to the division’s financial performance. The acquisition allows the group to establish a strong foothold in the northern region of Peninsular Malaysia and complement the group’s strategic presence throughout the Strait of Malacca,” it said.

Meanwhile, the energy and utilities division is expected to contribute positively, driven by the performance of its associate companies Malakoff and Gas Malaysia Bhd.

MMC said its substantial order book for the engineering division provides earnings visibility, anchored by the MRT 2 Line underground and elevated works, and supported by ongoing projects including Langat 2 Water Treatment Plant and Langat Centralised Sewerage Treatment project.