IJM eyes another RM2b in its order book

KUALA LUMPUR: IJM Corporation Bhd, which already has an order book of RM3.6 billion, is looking to add another RM2 billion worth of jobs into its stable in the current financial year ending March 31, 2011.

IJM’s out-going CEO and managing director Datuk Krishnan Tan said that the company’s presence abroad has helped it with the task of replenishing the order book.

Tan, 58, who has helmed IJM since 1997, will retire this year and hand over the reins to his deputy Datuk Teh Kean Ming.

“We are busy but its replenishment of the order book that is important. I think there are opportunities and there are more jobs coming into the market,” Tan told reporters after the company’s annual general meeting here yesterday.

About 70% of IJM’s projects are from Malaysia and 30% are abroad. IJM’s overseas projects are mostly in India.

“India at the moment is beginning to accelerate their road building programme and that is an area where we are already involved in... its possible that we will bid for some of the works there,” said Tan.

So far this year IJM has clinched three jobs locally. They are the Murum Dam access road worth RM46.7 million, the access road to the Second Penang bridge worth RM350 million and the Besraya Expressway which is RM600 million. The jobs are part of its RM3.6 billion order book that will keep the company’s construction arm busy for the next two years.

LEAVING ON A HIGH NOTE...

IJM Corporation Bhd is banking on its presence overseas to boost its order book by another RM2 billion to the RM3.6 billion in the current financial year ending March 31, 2011, according to out-going CEO and MD Datuk Krishnan Tan. Photo by Chu Juck Seng
On whether IJM is submitting a proposal for the proposed Mass Rail Transit (MRT) project, Tan said the government’s position on that is still not clear yet.

“Basically what we hear is that there is a proposal from Gamuda and MMC to the government. The government’s position is still not stated yet... whether the government is calling for a tender or Swiss Challenge or negotiated, we don’t know,” he said.

Going forward, Tan is optimistic of the group sustaining its performance because of IJM’s diversified interests. IJM, which started as a construction company, now has a significant portion of its contribution coming from its property, industry, plantation and infrastructure divisions.

“The turnover of the other businesses have grown substantially. We have diversified into the five sectors which are significant in size and the contribution of each of these divisions can be substantial,” he said.

For instance in the FY ended March 31, 2010, the biggest contributor to IJM’s pre-tax profit were from the industry and property divisions with 31% and 29% respectively while the construction sector only contributed 5%.

“Going forward, as far as property sales are concern, we are enjoying significant unbilled sales,” he said.

Tan was also optimistic of the group’s plantation division.

On its position in the Kemaman Port, Tan said the company has a minority stake (39%) in the port.

“From time to time if you get a good offer, you would consider,” said Tan, adding that IJM would like to be in the controlling position in any utilities that it owns but does not think it would be able to raise its stake in the Kemaman Port which is held by the state government via EPIC Bhd.

Asked on speculation that EPIC is looking at “kicking” IJM out of the port, Tan replied: “That would be a very expensive kick.”

Meanwhile in a related development, IJM Corp announced a net profit of RM90 million on a turnover of RM986.1 million for the first quarter (1Q) ended June 30, 2010. This is an improvement of 27% compared the RM70.8 million registered on a turnover of RM1.16 billion in the corresponding period last year.

According to the company, the group’s higher profit despite a lower turnover for the quarter compared to the corresponding quarter in 2009 was because its property, industrial and plantation divisions recorded higher profits.

IJM Plantations recorded RM29.9 million, or a 278% jump in net profit for 1Q ended June 30, 2010 compared to RM7.9 million registered in the corresponding period last year.

The higher profit this year came on the back of a turnover of RM113.3 million this year, which is a 20% increase compared to the corresponding period last year.

IJM Land also reported a 100% jump in net profit to RM53.5 million for 1Q ended June 30, 2010 compared to RM26.7 million recorded last year. Turnover for 1Q was RM365 million compared to RM284.8 million last year.

This article appeared in The Edge Financial Daily, August 26 2010.