MMC’s earnings fall on lower contributions


MMC Corp Bhd’s earnings year-onyear (YoY) for the second quarter ended June 30, 2018 (2Q18), eased due to a decline in contributions from its logistics and energy subsidiaries.

The conglomerate’s net profit fell 66.4% YoY to RM20 million, while revenue grew 27% YoY to RM1.2 billion in the period, its exchange filing last Friday noted.

“The higher revenue was offset by the lower contribution from the Refinery and Petrochemical Integrated Development project’s Material Offloading Facilities (Rapid MOLF) operations at Johor Port Bhd, and lower container volume handled at Northport (Malaysia) Bhd.

“The decline was also contributed by the share of profit from Malakoff Corp Bhd, due to a lower contribution from Segari Energy Venture Sdn Bhd’s (SEV) plant and lower fuel margin recorded at coal plants,” MMC stated in its exchange filing.

The increase in revenue was attributed to the work progress on the Klang Valley Mass Rapid Transit- Sungai Buloh-Serdang-Putrajaya (KVMRT-SSP) Line and the consolidation of Penang Port Sdn Bhd’s revenue.

Its ports and logistics division recorded an operating revenue of RM1.39 billion, a 1.6% decline YoY due to lower contribution from Rapid MOLF and lower container handled at Northport.

“The decline was cushioned by higher contribution from Pelabuhan Tanjung Pelepas Sdn Bhd and full consolidation of Penang Port,” it said. The energy and utilities division’s pretax profit fell 35% YoY to RM63.5 million due to the lower share of profit from independent power producer, Malakoff.

“This is mainly attributable to the lower contribution from SEV’s plant, lower fuel margin recorded at coal plants and lower contribution from associates,” it said.

Revenue for MMC’s engineering division jumped 152.3% YoY to RM1 billion in the period.

Moving forward, the group expects its ports and logistics division’s performance to improve from a stable container handling at all its ports.

“The recent completion of acquisition of the balance 51% interest in Penang Port in May 2018 is expected to contribute positively to the division’s earnings.

“The acquisition allows MMC to establish a strong foothold in the northern region of Peninsular Malaysia and complement the group’s strategic presence throughout the Straits of Melaka,” it said.

MMC said its substantial orderbook for the engineering division, anchored by the KVMRT-SSP Line underground work and project delivery partner (PDP) role for elevated portion, will provide earnings visibility.

“The earnings contribution from the engineering division will be sustained by ongoing projects — namely the Langat 2 water treatment plant, the Langat centralised sewerage treatment project and our involvement in the PDP role for the (Sabah portion of the) Pan Borneo Highway,” it said.