Malaysia Airports Improved Profit Performance from Last Quarter and Remained on Track to Meet EBITDA Target of RM861 million

By corporatecmsadmin, 11 August, 2024
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Malaysia Airports Improved Profit Performance from Last Quarter and Remained on Track to Meet EBITDA Target of RM861 million
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SEPANG - Malaysia Airports Holdings Berhad ("MAHB") improved its performance for the three months ended 30 September 2014 (“3Q14”) when it recorded profits after tax (PAT) of RM1.6 million when compared to a loss of RM44.7 million in the last preceding quarter. The Group remained on track to meet its 2014 target for earnings before interest, tax, depreciation and amortisation (“EBITDA”) of RM861.4 million as it recorded RM620.0 million EBITDA for the nine months ended 30 September 2014 (“9M14”). 

Excluding construction revenue and costs, MAHB registered revenue of RM1,970.0 million for 9M14 which was 10.7% higher than the RM1,779.3 million registered in its corresponding period in 2013 (“9M13”). EBITDA was at 2.3% lower and PAT had dropped by 80.3% to RM57.1 million from RM289.2 million in 9M13. 

The higher operating revenues were attributed to improved results from the airport operations segment, where passenger numbers increased by 6.8% in 9M14. KLIA passenger growth stood at 5.0%, higher than other main ASEAN capital airports. Non-aeronautical revenue also improved by 6.6% due to the increase in rental space in klia2. Meanwhile, revenue in non-airport operations segments grew by 35.5%. However, higher operating, finance, depreciation and amortisation costs curtailed the impact of improved revenues, thus causing a reduction in PAT. 

Nevertheless, in recording its revenue, MAHB adopts IC Interpretation 12: Service Concession Arrangements (“IC12”). Following this, the Group recognises construction revenue and costs in accordance with FRS 111: Construction Contracts by reference to the stage of completion of the construction works of klia2 and Penang International Airport. In 9M14, MAHB recognised construction revenue and costs of RM662.4 million and RM633.9 million respectively for klia2. These revenue and costs were recognised upon the completion of the infrastructure assets. 

The effect of IC12 has led the Group to post revenue of RM2,632.4 million for 9M14, representing a drop of 11.6% compared to RM2,978.0 million in 9M13. EBITDA dropped 5.6% from RM686.9 million while PAT had dropped by 74.9% to RM85.6 million from RM341.1 million in 9M13.  

Airport Operations Segment 

Revenue from this segment was driven by modest travel demand as it was hampered by the recent challenges faced in the aviation sector. A total of 61.2 million passengers (6.8% growth) passed through MAHB airports in Malaysia. While KLIA passenger growth for 9M14 stood at 5.0%, other airports in Malaysia recorded an aggregate growth of 9.6% during the period.  Both international and domestic passenger movements for all airports continued to record growth at 6.5% and 7.2% respectively. Total aircraft movements grew 7.2% to 579,323 aircrafts. 

Revenue generated by airport operations segment improved by 9.3% to RM1,843.0 million, mainly driven by aeronautical revenue which had improved by 11.8% on the back of the increase in passenger and aircraft numbers. The improvement in aeronautical revenue was also attributed to the recognition of Marginal Cost Support for Passenger Service Charge (“MARCS PSC”) as the new PSC rates are lower than the benchmark rate as stipulated in the Operating Agreements signed with the Government. Also contributing to the increase in aeronautical revenue is the rise in landing and parking charges which became effective from 1 January 2012 and increased 9% and 18% respectively (compounded annually) until 1 January 2014. 

As mentioned above, higher operating, finance, depreciation and amortisation costs curtailed the impact of improved revenues, thus causing a reduction in PAT. Operating costs which contributed to the increase during 9M14 were mainly user fee, staff and utility costs. 

The non-aeronautical revenue recorded a growth of 6.6% to RM851.2 million on the back of improved performance in its rental business. Revenue from rental of space, advertising and other commercial segments grew 13.8% to RM412.2 million, contributed by higher occupancy rate and higher rental royalty resulting from increase in rental space at klia2. MAHB's own retail business registered a marginal growth of 0.6%. 

Non-airport Operations Segment 

The non-airport operations segment recorded revenue of RM127.0 million in 9M14, representing an increase of 35.5% from RM93.7 million recorded in 9M13. While all sub-segments grew significantly during the period, the project, repair and maintenance segment recorded higher revenue of RM47.8 million or 98.0% due to new facility management work won including for the provision of facility maintenance services at the new Doha International Airport. 

The hotel segment revenue increased by 13.2% to RM54.1 million contributed mainly by higher occupancy rate (9M14:76%, 9M13:65%) and improved room rate. The agriculture and horticulture segment registered higher revenue of RM25.1 million in 9M14, 15.1% higher than the RM21.8 million registered in 9M13 due to higher Fresh Fruit Bunches price and higher production volume (9M14: RM516.89/49,397MT vs 9M13: RM459.40/46,868MT). 

Industry Review 

For 3Q14, MAHB airports handled 19.9 million passenger movements registering a decline of 2.1% over the same corresponding period last year. International and domestic movements recorded 0.8% and 3.4% decline respectively. 3Q14 passenger numbers were also lower than the previous quarter by 3.7%. Aircraft movements however, grew by 2.3% over the same period last year.

Traffic for the quarter was likely affected by demand sentiments in the region as well as the two unprecedented incidents involving Malaysia Airlines’ aircraft. While events in the Middle East have been affecting demand to Iran, Yemen and Egypt, emotional sentiments in China, including Hong Kong and Macao markets, with respect to MH370 also remains strong. In addition, Malaysia Airlines-operated destinations to Amsterdam and Heathrow, seems to be affected by MH17 incident.  Nevertheless, it is expected that the effective execution of the Malaysia Airlines turnaround plan and the oneworld alliance will play an important role in improving traffic generation.

Industry Outlook 

The full-year growth prospect remains softer than actual traffic growth to date. The first two quarters announcements of Malaysia’s actual GDP performance is promising. However, IMF had revised downwards the global economy forecast for the year to 3.3% in October 2014. The 2015 forecast was also lowered by another 0.2% to 3.8%. MAHB is on-track to achieve full-year traffic numbers of over 83 million passengers despite the recent setbacks in the aviation industry. This is evident from the strong growth over the last decade and resilience shown during previous downturns such as SARS and the financial crisis. 

The Malaysia Year of Festivals campaign in 2015 is expected to enhance the growth prospects for MAHB. klia2’s position as another flagship international gateway to Malaysia is vital in supporting the campaign. KLIA is at the forefront of providing a hybrid solution to cater to today’s highly competitive and dynamic industry in offering a new model of connectivity and this has been acknowledged by the Centre of Aviation (CAPA) in awarding KLIA Asia Pacific's Large International Airport of the Year 2014. The return of British Airways in 2015 has also strengthen KLIA’s position as oneworld’s South East Asian Hub. MAHB will continue to replicate this winning formula in its other endeavours to lure more foreign airlines to KLIA as part of its aspiration to make KLIA a great airport hub.

 

 


 

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