Khazanah sees lower operations profit due to fiscal aid for airline

Nonetheless, Khazanah continued to maintain its financial discipline with opex reduced to RM420m

by AZREEN HANI / Pic by AFP

KHAZANAH Nasional Bhd recorded lower profit from operations of RM670 million in 2021, compared to RM2.9 billion in 2020. 

According to Khazanah, the reduced profit was mainly due to the financial assistance extended to the airlines and tourism investee companies as these sectors continue to be impacted by the Covid-19 pandemic. 

“It was also due to lower fair value gains as well as lower dividend income received from our investee companies on the back of subdued 2020 earnings,” the sovereign wealth fund said in its report published today.

Nonetheless, Khazanah continued to maintain its financial discipline with operating expenditure (opex) reduced to RM420 million from RM490 million in 2020. 

Its debt increased to RM48 billion from RM43 billion in the previous year, while its realisable asset value over debt ratio remained healthy at 2.8 times.

Khazanah had declared a dividend of RM2 billion to the government in 2021.

“Despite the tough year, Khazanah continued to grow its portfolio value with net asset value (NAV) growing from RM79 billion in 2020 to RM86 billion in 2021, translating to a compounded annual growth rate of 5.8% since 2004,” said Khazanah MD Datuk Amirul Feisal Wan Zahir in the same report.

“For the strategic fund, it recorded a NAV time-weighted rate of return of negative 11.4% where we continued to support many of our pandemic-impacted assets, namely in the aviation and tourism sectors.

“Despite this, the timely completion of Malaysia Aviation Group’s restructuring exercise, which reduced liabilities by RM15 billion, is a significant milestone which will make the airline more financially resilient ahead of the recovery in air travel,” he added.

Khazanah, he said, targets to spur and catalyse new growth areas to make Malaysia more resilient and competitive via Dana Impak, a RM6 billion commitment for catalytic sectors. 

According to him, the initiatives will have specific financial commitments to be aligned with the national agenda and will be guided by a set of outcomes such as increasing household incomes, improving other socio-economic measures, and promoting crowding-in by the private sector.

“Khazanah will strengthen its role as an active corporate player. This is critical in the pursuit of rejuvenating our assets following two consecutive years of downward pressure on operating profits,” Amirul Feisal said, adding that Khazanah will also continue to be a global investor to grow its portfolio while finding opportunities to facilitate flows of knowledge, networks and investment opportunities into Malaysia.

“With our investments overseas, we have also built strong relationships for both Khazanah and Malaysia, which has enhanced Malaysia’s reputation as a progressive nation that participates meaningfully in the global economy and investment community,” he added.

Meanwhile, Khazanah chairman Datuk Seri Ismail Sabri Yaakob is confident in the management’s ability to overcome challenges and create sustainable growth for the long-term. 

“I am cognisant of the fact that Khazanah does not expect recovery in hard-hit sectors such as aviation and tourism until 2023 but I am very confident in the management’s ability to do their best to overcome the specific challenges impacting these important sectors and create sustainable growth for the long-term,” he said.

“I am also encouraged by Khazanah’s positive overall performance in 2021 despite the significant commercial obstacles caused by the Movement Control Order and a tepid global economy. I am confident Khazanah is now perfectly positioned to aggressively embark on the signature strategic initiative, Advancing Malaysia,” Ismail Sabri added.