MMC Corp’s 1Q earnings improve on higher port operations

Higher interest income and lower opex from the KVMRT-SSP Line project also contributes to the improves earnings

by SHAZNI ONG/ pic by ARIF KARTONO

MMC Corp Bhd’s earnings in the first quarter (1Q) improved on higher demand for its ports services, lower operating expenses (opex) and higher interest income earned.

The group posted an 8% year-on-year (YoY) jump in net profit to RM57.88 million or earnings per share of 1.9 sen for the quarter ended March 31, 2020, despite revenue for the period falling 5% YoY to RM1.09 billion.

MMC attributed the improve profit level to higher contributions from its port operations at Pelabuhan Tanjung Pelepas (PTP) and Johor Port Bhd (JPB), gain on disposal of an asset held for sale in JPB, and higher share of results from associate Malakoff Corp Bhd.

Higher interest income and lower opex at the Klang Valley Mass Rapid Transit Sungai Buloh-Serdang-Putrajaya (KVMRT-SSP) Line project also helped contribute towards the improvements in its earnings.

The fall in revenue in 1Q was due to lower work progress on underground work packages for the KVMRT-SSP Line project, lower volume handled at Northport Malaysia Bhd, and lower contribution from Kontena Nasional Bhd.

MMC’s shares closed 3.42% or 21⁄2 sen higher to 75.5 sen valuing the utilities and infrastructure group at RM2.3 billion.

Due to the Covid-19 pandemic’s economic impact, MMC anticipates a challenging environment in the short to medium term.

The group stated it would focus on resource optimisation to reduce its operating cost in line with the challenging economic outlook.

“We are committed to strengthen our market position by focusing on operational performance and efficiency and capability improvements, while exploring new opportunities,” its group MD Datuk Seri Che Khalib Mohamad Noh said in a statement yesterday.

The group noted that measures taken by the governments worldwide to contain the Covid-19 pandemic have affected global economic activity and the group expects its performance to be affected, the extent of which will depend on the severity and duration of the outbreak.

MMC stated that its port and logistics division would focus on resource optimisation amid the uncertainty in the global container volume outlook.

“Continuous vigilant investments into the ports’ infrastructures, capacities, and capabilities along with the operational efficiency and group-wide cost synergies initiatives are expected to be the anchor to the overall port and logistics performance,” it said.

MMC noted that the energy and utilities division is expected to provide consistent earnings to the group from the contributions by its associated companies, namely Malakoff Corp and Gas Malaysia Bhd.

The engineering division will continue to provide earnings visibility for the group from its substantial existing orderbook, anchored by the KVMRT-SSP Line project.

“The division remains active in its effort to replenish its orderbook while focusing on the execution and timely completion of its existing projects, it added.