SEPANG – Malaysia Airports Holdings Berhad ("MAHB" or “the Group”) had registered earnings before interest, tax, depreciation and amortisation (“EBITDA”) of RM824.0 million for the six months ended 30 June 2015 (“1H15”), representing a growth of 83.9%, when compared against the six months ended 30 June 2014 (“1H14”). The Group also recorded revenue of RM1,816.1 million.
In recording its revenue for the prior periods, MAHB adopted IC Interpretation 12: Service Concession Arrangements (“IC12”). Following this, MAHB recognised construction revenue and costs in accordance with FRS 111: Construction Contracts by reference to the stage of completion of the construction works of infrastructure assets. In 1H14, MAHB recognised construction revenue and cost of RM662.4 million and RM633.9 million respectively for klia2. There were no construction revenue and costs recognised in the current period upon completion of klia2 in May 2014.
Group Performance
Excluding construction revenue and costs, the Group registered total revenue of RM1,816.1 million or 40.3% higher in 1H15, while EBITDA grew by 96.4% to RM824.0 million. Profit before tax (“PBT”) had decreased by 63.7% to RM41.0 million while profit after tax (“PAT”) had also decreased by 78.6% to RM11.9 million. The 40.3% growth in revenue was attributable to the improved results from the airport operations segment which grew by 38.7% to RM1,689.4 million, mainly contributed from MAHB’s Turkish operations in Istanbul Sabiha Gökçen Uluslararasi Havalimani Yatirim Yapim Ve Isletme A.S. (“ISG”) and LGM Havalimani Isletmeleri Ticaret ve Turizm A.S. (“LGM”). Revenue from the non-airport operations segment grew by 65.5% to RM126.7 million. However, higher depreciation and amortisation, operating and finance costs curtailed the impact of improved revenues, leading to a reduction in the Group’s PBT and PAT. The drop was cushioned by the net gain on disposal of the Delhi International Airport Limited (“DIAL”), amounting to RM22.1 million and a realised gain on foreign exchange of RM63.4 million, represented by the repayment of the EUR279.2 million loan following the weakening of the Euro against Ringgit in 1H15.
With the combined performance in ISG, the MAHB system of airports handled 54.0 million passengers in the first half of 2015, a 3.5% growth over the same period in 2014. Similarly, aircraft movements grew 8.1% to 501,743 movements in 1H15.
Malaysia Operations
By removing ISG & LGM’s results altogether, MAHB recorded revenue of RM1,415.6 million for 1H15, which was 9.4% higher than 1H14. EBITDA improved by 27.1% to RM533.5 million. Revenue growth came from both airport and non-airport operations segments, which grew by 6.3% and 58.1% to RM1,294.4 million and RM121.1 million respectively. MAHB’s Malaysian operations recorded higher PBT and PAT by 23.5% and 84.1% to RM139.2 million and RM102.2 million respectively. The increase in PBT and PAT was mainly due to the net gain on disposal of DIAL and the realised foreign exchange gains due to the weakening of the Euro against the Ringgit. The upside on PBT and PAT has been negated by higher depreciation and amortisation, finance and operating costs.
Airport Operations Segment
Passenger movements at MAHB’s 39 airports in Malaysia stood at 41.3 million passengers for the first 6 months of 2015. Domestic passenger movements grew by 1.8% to 21.7 million passengers while international passenger movements have fallen by 1.9% to 19.6 million passengers.
Total aircraft movements grew 6.3% to 409,177 aircrafts. Passenger movements at KLIA decreased by 1.6% while other airports in Malaysia recorded an aggregate growth of 2.4% in 1H15.
Growth in airport operations was driven primarily by non-aeronautical revenue, which have improved by 9.3% to RM613.5 million in 1H15. This improvement is due to the increase in rental and retail revenue by 15.1% and 4.3% respectively, in line with the larger commercial space at klia2 in 1H15 vis-à-vis 1H14. Aeronautical revenue increased by 3.8% to RM681.0 million in 1H15, driven by higher aircraft movements and lower airline incentives compared to the previous corresponding period.
Non-Airports Operations Segment
The non-airport operations segment recorded revenue of RM121.1 million, representing a growth of 58.1% from RM76.6 million achieved in 1H14. The growth was due to the higher revenue recorded in the projects and repair & maintenance segment, revenue surged by 197.1% to RM72.7 million in 1H15, mainly due to the new facilities management work won, including for the provision of facilities maintenance and IT services at the new Doha International Airport.
Revenue from the agriculture & horticulture segment had fallen by 3.5% to RM14.5 million, dragged down by lower price attained for Fresh Fruit Bunches per tonne and weakening production volume. Meanwhile, revenue from the hotel segment decreased by 8.5% to RM33.9 million, mainly due to lower occupancy rate.
Turkish Operations
ISG’s passenger movements recorded strong double-digit growth for both domestic and international sectors by 19.3% and 11.8% respectively, achieving an overall growth of 16.6% to 12.6 million passengers in 1H15. Overall aircraft movements rose 17.0% to 92,566 movements. When excluding revenue from jet fuel farm rental, ISG’s aeronautical and non-aeronautical revenue grew by 13.2% and 16.2% to RM199.4 million and RM195.6 million respectively in 1H15.
The favourable revenue growth was boosted by the solid climb in passenger movements, thus resulting in higher PSC and commercial contributions. By the same token, EBITDA grew by 13.8% to RM273.8 million. Revenue from LGM had risen by 33.5% to RM55.0 million while EBITDA stood at RM13.2 million. Despite the favourable revenue results, ISG and LGM recorded a collective loss before tax of RM7.5 million in 1H15. This is mainly resulted from the fair valuation exercise undertaken during the acquisition of ISG and LGM, of which a further RM90.7 million loss was recognised arising from the amortisation of fair value of the concession rights.
Industry Review
Malaysia’s traffic for the second quarter is better than the first quarter, raising the 1H15’s traffic level to positive from -1.2% in the first quarter. Second quarter performance was commendable considering the current unfavourable global economic environment coupled with slower June traffic due to lesser travellers in the Ramadhan month. China traffic is now registering a double digit growth spurred by the Malaysian government’s continuous effort to stimulate inbound tourism from China. British Airways performance has also been encouraging and All Nippon Airways is scheduled to start operating in KLIA from September 2015.
Industry Outlook
In July 2015, the IMF had revised downward the global economic forecast to 3.3% from 3.5% projected previously in April 2015. The aviation industry outlook has also been hit in respond to the recent adverse news concerning Malaysia Airlines’ restructuring outcome, the cutting of routes and frequencies and deferment of AirAsia X’s expansion plan. Despite that, MAHB foresees a positive trend moving forward and expects 2015 passenger traffic target of 85.8 million passenger movements for Malaysia to be on track and achievable by end of 2015. Given the stronger than anticipated ISG passenger numbers, MAHB expects to continue benefit from this steady growth.
As a government-linked company, MAHB is part of the 10-year GLC Transformation Programme which ends in 2015. Since its participation, the Group’s performance has grown significantly and its successful graduation from the programme can be seen from the returns it has provided to shareholders over the last ten years. MAHB is confident that the resultant momentum from this programme will be sustained and will propel the Group to higher achievements.