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Plantation boost for IJM Corp as net profit rose 72% to RM431.6m in FY21

KUALA LUMPUR: IJM Corporation Bhd posted net profit of RM431.68mil in the financial year ended March 31,2021 compared with RM250.59mil a year ago, mainly due to higher profit contribution from the group’s plantation division.

Announcing a stronger set of earnings on Thursday, IJM Corp – which is involved in property, infrastructure, concessions and plantations – said profit before tax rose by 50.6% to RM779.55mil from RM517.76mil.

However, its revenue fell by 14.9% to RM5.62bil compared with RM6.60bil a year ago as during the year, various movement control orders (MCOs) that were implemented had an adverse impact on the group’s businesses.

The company declared a single tier second interim dividend of four sen per share. Coupled with the single tier first interim dividend of two sen per share declared in 2Q FY2021, the total dividend declared for FY2021 amounts to six sen per share. FY2020 total dividend declared was three sen per share

Overall, IJM Corp described FY21 financial performance as commendable despite uncertainties and operational disruptions from movement control restrictions.

IJM CEO & managing director Liew Hau Seng said the group’s performance was affected due to numerous movement control measures imposed by the government to contain the spread of the Covid-19 virus.

“Our businesses saw varying degrees of constraints during the year while there was notably lower traffic volume at the group’s toll roads during certain periods of movement restrictions, ” he said.

For the fourth quarter, its net profit surged by 161.4% to RM186.39mil from RM71.29mil a year ago. However, its revenue fell by 21.8% to RM1.60bil from RM2.40bil.

IJM has RM1.5bil of construction order book wins in FY2021, in addition to two contracts secured in April 2021 amounting to RM327.6mil, which provide near term earnings visibility

FY21 construction

Although the group’s construction sites were able to operate for most of the year, full year revenue of the construction division decreased by 5.1% to RM1.94bil compared to RM2.05bil a year ago.

Profit before tax (PBT) fell by 20.5% to RM137.7mil compared to RM173.2 million achieved in the previous year mainly due to lower construction activities during the movement control periods and share of losses from an associate.

Property

The division’s revenue fell by 40.8% to RM1.29bil from RM2.19bil last year mainly due to lower work progress during the movement control order periods and the absence of contribution from the Royal Mint Gardens, London project that was completed in the previous financial year. PBT fell 13.2% to RM176.5mil from RM203.3mil a year ago.

Industry

Revenue fell by 16.7% to RM691mil from RM829.5mil last year mainly due to lower deliveries of piles, quarry products and ready-mixed concrete in line with the lower level of construction activities.

However, PBT for the year was 51.9% higher at RM68.2mil compared to RM44.9mil in the previous year, mainly arising from gains on disposal of the division’s operations in China and certain property, plant and equipment.

Infrastructure

Revenue slipped by 5.4% to RM751mil from RM974.2mil mainly due to the decrease in local traffic volume during the movement control order periods although the decrease was partly mitigated by the higher cargo throughput handled by the Group’s Kuantan Port operations.

The division reported a PBT of RM117.1mil for the year, down by 23.6% from RM153.2mil in FY2020 mainly due to the lower local traffic volume recorded despite the higher profit contribution from the group’s Kuantan Port operations.

Plantation

Revenue rose 26.6% to RM935.7mil from RM739.1mil last year mainly due to higher commodity prices and higher production volume.

During the year, the division recorded a net foreign exchange gain of RM82.4mil compared to a loss in the preceding year of RM87.1million on its foreign currency denominated borrowings as the Indonesian Rupiah strengthened against both the US Dollar and the Japanese Yen.

“The higher commodity prices and higher production volume coupled with the favourable currency movements contributed to the 639.2% improvement in pre-tax profit for the year of RM272.1mil compared to a loss before tax of RM50.5mil the year before.

“The division’s stellar financial performance in FY2021 marks its best ever revenue and profit achieved since its inception in 1985, ” it said.

Outlook

Liew said IJM Corp expects a gradual recovery in the business landscape, arising from the efforts of the Malaysian Government to revitalise the economy through an expansionary Budget for 2021 and the rollout of Covid-19 vaccine.

He said the group would continue to building resilience to address the short-term economic uncertainties through cost containment, aggressive paring down of property inventory and low yielding assets.

IJM, he said, would also undertake proactive capital management, while looking for growth opportunities via participation in large infrastructure project tenders, continuing with the launches of its well-received mid-range property products and capitalising on the growth potential of Kuantan Port.

“The group’s fundamentals remain solid and its healthy balance sheet with a net gearing of 44.0% is expected to provide resilience as the group navigates the uncertain business environment.

“At end-March 2021, we have a healthy outstanding construction order book of RM4bil that comprises a good mix of private and public sector projects, providing the Group with good earnings visibility over the next few years.

“In addition, the group has secured two contracts in April 2021 – an RM89.8mil contract for the construction of infrastructure building and public realms works at Tun Razak Exchange (TRX), Kuala Lumpur, and another contract worth RM237.8mil for the construction of the Mezzo residential tower at The Light City, Penang, ” Liew said.

On the group’s property division, Liew said: “Robust property sales of RM1.7bil in FY2021 underscores the healthy demand in the mid-segment market. Despite the ongoing pandemic, we registered sales of RM600mil in the final quarter on the back of encouraging take-up of mid-range properties.”