KUALA LUMPUR (Sept 1): Johor-based water and utilities firm Ranhill Utilities Bhd reported lower net profit on both quarterly and annual basis for the second quarter ended June 30, 2020 (2QFY20) amid lower revenue across its business operations.
Its posted a net profit of RM13.19 million in 2QFY20, falling 29.37% year-on-year (y-o-y) from RM18.67 million and contracting 27.5% quarter-on quarter (q-o-q) from RM18.19 million.
Revenue for 2QFY20 stood at RM368.88 million, about 13% y-o-y lower against RM423.99 million, but was up marginally by 0.16% q-o-q from RM368.28 million.
In an Aug 26 bourse filing, the firm said the drop in its quarterly results had dragged its net profit to RM31.38 million for the cumulative six-month period ended June 30, about 21.63% lower compared to RM40.04 million a year ago. Revenue dropped 11.08% y-o-y to RM737.16 million against RM829.04 million.
Ranhill said the decrease in revenue for the quarter and year to date were mainly contributed by lower water revenue, lower developer contribution, a RM2.6 million discount to the B40 income group following the implementation of movement control order (MCO) by the government, lower engineering, procurement and construction revenue from Ranhill Water Technology of RM18.1 million and reduction in power tariff upon full repayment of project loan as stipulated in the power purchase agreement which contributed to lower revenue of approximately RM35 million.
Moving forward, the group foresees it will be a challenging year ahead. In view of this, Ranhill will exercise caution in managing the group’s business to ensure continuous recurring and stable source of cash flow is generated to support the operations and optimise the value of the stakeholders.
Given the outbreak and the recent change in the country’s administration, it said the negotiations on tariff hike is expected to take longer than expected to materialise.
Initiatives to explore the opportunity in expanding water supply operations to other states in Malaysia are still actively sought, based on the “Asset-Light” model, Ranhill stated.
Ranhill said it maintains its target to own and operate gross 1,000 megawatt (MW) (currently 380 MW) power plants that deliver clean energy and 3,000 million litre per day (MLD) water (currently 2,456 MLD) and wastewater treatment capacity, of which 400 MLD is to be from international segment by 2022.
In a separate statement, its group president and chief executive Tan Sri Hamdan Mohamad said Ranhill had also provided a discount to B40 households during the MCO, absorbing the costs for this which further affected its bottom line.
“Nevertheless, by ensuring that our core businesses in the environment and power sectors continued to generate stable cashflow, we were able to deliver sustained results,” he said.
Hamdan said with efforts ongoing to contain the spread of Covid-19, the outlook for the second half of the year is uncertain.
“Further to this, tariff adjustments are expected to take longer to materialise given the current situation.
“Despite this challenging climate, the group is committed to ensuring the sustainability of our businesses, building on our strong track record to continue scaling up our capabilities and operations in both our domestic and overseas markets,” he said.
At the midday break today, Ranhill was flat at 89.5 sen with 84,400 shares traded.
Edited by Surin Murugiah