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MAHB Reports Profit Before Tax Of RM602.8 Million On The Back Of A 28.8% Revenue Growth In FY2012

20 February 2013

Sepang, 20 February 2013 - Malaysia Airports Holdings Berhad ("MAHB") recorded a revenue of RM3,548.1 million for the final year ended 31 December 2012 ("FY2012"), representing a growth of 28.8% compared to RM2,754.8 million in the corresponding period in 2011 ("FY2011"). Earnings before interest, tax, depreciation and amortisation ("EBITDA") grew 12.5% to RM929.7 million from RM826.5 million in FY2011. Profit before tax and zakat ("PBT") stood at RM602.8 million, representing an increase of 5.0% compared to the RM574.2 million registered in FY2011. Net profit from continued operations however, fell marginally by 1.7% to RM394.3 million in FY2012, compared to RM401.2 million recorded in FY2011.

In line with the adoption of IC Interpretation 12: Service Concession Arrangements ("IC 12") effective 1 January 2011, MAHB recognises the 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, which are construction works on public sector infrastructure assets and services currently being undertaken by MAHB.In FY2012, MAHB recognised the construction revenue and costs in relation to the aforesaid projects amounting to RM1,385.0 million and RM1,321.7 million respectively.

Excluding the effects of IC 12, revenue for FY2012 was RM2,163.0 million, which was 11.8% higher than the RM1,934.3 million registered in FY2011. PBT for FY2012 stood at RM539.5 million which increased marginally by 0.7% compared to RM535.9 million registered in FY2011.

The increase in operating revenue was attributed to stronger results from the airport operations segment, driven by robust air travel demand. The aviation industry remained buoyant amidst the global economic headwinds as the overall global passenger traffic grew 4.0% in 2012, according to the Airport Council International. For the Group, despite faced with challenges throughout the year, such as route rationalisation by airlines, passenger growth outpaced the global passenger traffic. MAHB overall passenger traffic grew 5.0% in 2012, with a totalof 67.2 million passengers having passed through MAHB's 39 airports in Malaysia. Domestic passenger traffic movements registered a moderate growth of 3.9% and were outperformed by international passenger growth of 6.1%. The total passenger movements in KLIA improved by 5.8%, as LCCT reported a strong growth of 9.9% while KLIA-MTB grew by 2.3%. All other airports recorded an aggregate growth in total passenger movements of 3.8%.

Total aircraft movements grew by 2.3% to 646,535 aircrafts, with the international sector recording a higher growth of 6.1% compared to the domestic sector, which remained flat with a mere 0.1% growth.

Excluding the IC 12 effects, revenue generated by our airport operations segment improved by 13.2% to RM2,022.1 million. Aeronautical revenue improved by 16.6% on the back of increased passenger numbers and implementation of new rates. The increase in revenue was also attributed to lower airline incentives accrued in FY2012, amounting to RM65.0 million, which was 37.2% lower compared to the RM103.7 million accrued in FY2011. This was due to the change to a new Airline Incentive Programme effective 2012, from the Airline Recovery Programme previously.

In spite of the commendable revenue growth, PBT (excluding IC 12 affects) growth was negated by the impairment of investment in Maldives, namely GMR Male International Airport Private Limited ("GMIAL"). MAHB had provided for the impairment of the investment on the cost of investment and total share of profit recognised for GMIAL from FY2010 to FY2012, totaling to RM68.9 million due to the termination of Concession Agreement between Government of Maldives and GMIAL in December 2012.

MAHB'snon-aeronautical revenue recorded a growth of 9.8% to RM985.4 million on the back of improved performance in the retail and rental businesses. MAHB's own retail business grew by 13.3% to RM563.5 million in FY2012, ahead of overall passenger traffic growth of 5.0%. This was due to an increase in passenger volume and higher retail spending per passenger. Revenue from rental of space, advertising and other commercial segments grew by 6.5% to RM368.0 million, contributed mainly by higher rental royalty resulting from the stronger sales at KLIA and increased car park revenue due to higher number of air passengers and airport visitors.

The non-airport operations segment recorded revenue of RM140.9 million in FY2012, representing a decrease of 4.5% from RM147.6 million recorded in FY2011mainly due to lower revenue recorded in the agriculture and horticulture segment. The agriculture and horticulture segment registered a revenue of RM45.6 million in FY2012which was 17.7% lower than the RM55.4 million registered in FY2012due to lower price attained for fresh fruit bunches (2012: RM572/78,285MT vs. 2011: RM681/79,681MT). The decrease in production was in line with the industry outlook due to the occurrence of El Nino in recent years which have a direct effect on oil palm yield. However, this was offset by the growth in the project & repair maintenance and hotel segment of 10.0% and 1.7% respectively. Finally, contribution from the project and repair maintenance segment growth was due to the higher revenue generated from new project wins secured during the year.

The Group's better performance of its overall passenger traffic growth of 5.0% compared to the global passenger growth indicates that the demand for air travelling, especially in Asia, remains resilient. While the global economic outlook uncertainty persists, with the International Monetary Fund revising downwards the world GDP forecast for 2013, the outlook for the aviation industry is expected to remain healthy. The International Airport Association and Airport Council International have forecasted the 2013 world passenger traffic to grow by 4.5% and 4.9% respectively while the International Civil Aviation Organisation expects a stronger growth of 6.0%.

Closer to home, the Malaysian economy has remained resilient, with a 3Q 2012 GDP growth of 5.2% and the 4Q 2012 GDP is expected to be better. This has mainly been attributed to the strong domestic demand from both private and public sector and continuous efforts by the Government of Malaysia to boost the economy. The Malaysian economy is forecasted to register a growth of 5-6% in 2013 based on the Economic Report 2012/2013 released by the Ministry of Finance.

Thus, these positive outlooks certainly bode well for the aviation industry as these would help drive the demand for air travel. Already, there are several encouraging developments. Foreign airlines such as Air France are expected to recommence 3-times weekly of direct routes for KL-Paris as well as the commencement of new airlines such as Malindo Air and Ethiopian Airlines. Also, MAS' entry into oneworld, delivery of A380s, the reinstatement of direct international routes to Sabah and MAS wings' initiative to focus into the BIMP EAGA Region should provide a lift for passenger traffic. In light of these developments, MAHB expects to achieve an overall passenger traffic growth of 7.1% for 2013. In addition, the commencement of klia2 on 28 June 2013 is expected to further drive MAHB's earnings on the back of stronger passenger movements and enhancement in retail and commercial operations.

Description FY2012* (million) FY2011* (million) Variance (%)
Revenue 3,548.1 2,754.8 28.8
Earnings before interest, taxes, depreciation and amortisation (EBITDA) 929.7 826.5 12.5
Profit before tax 602.8 574.2 5.0
Profit after tax 394.3 401.2 -1.7

*With Construction Profits

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