MMC 2Q net profit almost halved on absence of disposal gain

KUALA LUMPUR (Aug 29): MMC Corp Bhd’s net profit fell 49.7% to RM62.92 million in the second quarter ended June 30, 2017 (2QFY17) from RM125.02 million a year ago, mainly due to the absence of gain on the sale of land at Senai Airport Free Industrial Zone, as well as the substantial completion of the Klang Valley’s Mass Rail Transit’s Sungai Buloh-Kajang line (KVMRT-SBK) last year.

Lower contribution due to outages occurred at Tanjung Bin Energy’s power plant in Johor also led to the decline in earnings in 2QFY17.

Earnings per share was lower at 2.10 sen compared with 4.10 sen a year ago.

Quarterly revenue also slipped 0.6% to RM944.43 million in 2QFY17 from RM950.26 million in 2QFY16, mainly due to the substantial completion of the KVMRT-SBK line.

The lower second-quarter results dragged net profit for the cumulative six months (1HFY17) lower to RM118.06 million, down 33.1% from RM176.36 million a year ago. Revenue fell by a marginal 0.9% to RM1.87 billion from RM1.89 billion in 1HFY16.

In a filing with Bursa Malaysia yesterday, MMC said the ports and logistics segment recorded a 2.1% year-on-year (y-o-y) decline in pre-tax profit and zakat to RM241.9 million in 1HFY17, on higher depreciation and operational cost attributed to an increase in the average diesel price per litre at all ports.

“The energy and utilities segment [also] recorded a decrease in pre-tax profit and zakat of RM99.8 million from RM105.4 million a year ago, due to lower share of profit from Malakoff Corp Bhd,” it added.

In addition, MMC saw a lower pre-tax profit and zakat from its engineering and construction segment, which fell 22.8% y-o-y to RM84.7 million in 1HFY17, primarily due to the substantial completion of KVMRT-SBK line and lower fees recognised from its project delivery partner (PDP) role as the project is approaching completion.

MMC said it remains positive of its prospects driven by stable performances of its operating companies together with contributions from ongoing construction projects.

“The ports and logistics division is expected to register higher revenue across all the ports,” it added.

As for its energy and utilities division, the group said it would continue to contribute positively from its associated companies — Malakoff and Gas Malaysia Bhd.

“The earnings contribution from the engineering and construction division will be sustained by ongoing projects — the Langat 2 water treatment plant, Langat centralised sewerage treatment project and our involvement as a PDP for the Pan Borneo Sabah Highway,” it added.

MMC shares closed 2.2% or five sen higher at RM2.38 yesterday, with a market capitalisation of RM7.22 billion.

This article first appeared in The Edge Financial Daily, on Aug 29, 2017.

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