YTL 1Q profit down 25% as earnings from most divisions fall

KUALA LUMPUR (Nov 18): YTL Corp Bhd saw its net profit drop 25% to RM150.33 million or 1.44 sen for the first quarter ended Sept 30, 2016 (1QFY17), from RM202.62 million or 1.94 sen per share a year earlier, as it saw lower profit contribution from all but two of its seven business divisions.

Its revenue narrowed 21% to RM3.49 billion from RM4.45 billion in the previous year, its bourse filing yesterday showed.

The group said its business divisions saw lower profit, with the exception of its construction division and hotels division, which achieved a profit before tax (PBT) of RM8.79 million (up 16.7%) and RM13.69 million (up 117.8%), respectively.

Its two largest divisions, utilities and cement manufacturing and trading, however, saw PBT fall 21% to RM201.81 million and 36% to RM74.94 million, respectively.

The utilities division was affected by the absence of revenue from its contracted power generation division due to the completion of the power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) on Sept 30, 2015, lower fuel oil price in the multi-utility division, and the strengthening of the ringgit against British pound.

The cement manufacturing and trading business, on the other hand, was hit by competitive pricing and lower sales volume.

Meanwhile, profit from its information technology and e-commerce business was impacted by lower income from software sales (PBT fell 73% to RM152,000), while the property investment and development division saw a 6% decline in PBT to RM38.38 million on lower unrealised gains on foreign exchange, as the Singapore dollar weakened against ringgit during the quarter.

Going forward, the group said its construction division is expected to post “satisfactory performance” for FY17, supported by YTL’s property development and infrastructure works.

The growth in the local construction sector is also expected to bode well for its cement manufacturing and trading division.

As for its utilities division, the group said the power plants being developed by PT Tanjung Jati Power Co and Attarat Power Co — in which YTL owns 80% and 45% respectively — are currently in the development stage and moving towards achieving financial close.

YTL, which has been awarded the project to supply 585mw of electricity from its existing facility in Paka between March 1, 2016 and Dec 31, 2018 by the Energy Commission (EC), also updated that it had yet to sign the PPA for the uptake with TNB, as the latter wanted a new land lease to be inked under the terms of PPA.

Although the EC had issued a directive to TNB to remove this condition as the existing land lease of Paka will only expire on Dec 30, 2018, TNB applied for a judicial review on July 4 to quash the directive. The proceedings, YTL said, are still pending before court.

This article first appeared in The Edge Financial Daily, on Nov 18, 2016. Subscribe to The Edge Financial Daily here.