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Kuala Lumpur, Kuala Lumpur, Malaysia

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Quarterly Report For The Financial Period Ended 30 June 2020

Financials Archive

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Condensed Unaudited Consolidated Statement Of Profit Or Loss for The Period Ended 30 June 2020

Income Statement

Condensed Unaudited Consolidated Statement of Financial Position As At 30 June 2020

Income Statement

Performance Review

Income Statement

2Q 2020 vs 2Q 2019 (Q-on-Q)

Revenue

The Group’s revenue for the current quarter declined significantly by 78.4% over the corresponding quarter in the prior year to RM272.2 million in tandem with the significant contraction in passenger movements of 96.0% due to the global impact of COVID-19 pandemic and prolonged Movement Control Order (MCO) period in Malaysia and other countries.

The impact of prolonged MCO period and border closures, has resulted in significant decline in airport operations’ revenue by 80.0% to RM238.7 million. Revenue from the aeronautical segment decreased by 93.1% to RM45.6 million over the corresponding quarter in the prior year. Passenger traffic for the Malaysia operations contracted by 96.9% (international: -98.4%, domestic: -95.3%) to 0.8 million passengers as compared to 25.8 million passengers recorded in the corresponding quarter in the prior year. The passenger traffic for Turkey operations contracted by 93.2% (international: -100%, domestic: 88.9%) to 0.6 million passengers as compared to 8.8 million passengers recorded in the corresponding quarter in the prior year. Non-aeronautical segment decreased by 63.4% to RM193.1 million as compared to the corresponding quarter in the prior year.

Revenue from the non-airport operations decreased by 51.5% or RM35.6 million due to lower revenue from the project and repair maintenance and hotel businesses.

Overall, Malaysia and Turkey operations had recorded a significant decrease in revenue by 75.5% to RM221.6 million and 89.0% to RM35.1 million respectively. Qatar operations recorded a decrease in revenue from RM38.7 million to RM15.5 million.

(Loss)/profit before tax and zakat (LBT/PBT)

The Group recorded a LBT of RM268.3 million as compared to PBT of RM201.6 million in the corresponding quarter in the prior year mainly due to the significant decrease in revenue by 78.4%. Group cost decreased by 47.7% due to lower operating cost arising from cost containment initiatives to weather the impact of COVID-19 and lower other costs such as user fee, finance cost, depreciation and amortisation recorded during the period.

Malaysia and Qatar operations recorded LBT of RM107.5 million and RM2.7 million respectively as compared to PBT recorded in the corresponding quarter in the prior year. Turkey operations had recorded a LBT of RM158.1 million, higher losses as compared to LBT of RM16.5 million recorded in the corresponding quarter in the prior year.

The higher losses however cushioned with the recognition of prior year tax recoverable and deferred tax asset recognised for current period business losses. Accordingly, the Group recorded loss after taxation (LAT) of RM91.1 million.

Share of results of Associates and Joint Ventures (JV)

In the current quarter under review, the share of results from associates recorded losses amounting to RM2.0 million, lower by RM5.0 million as compared to the profits of RM3.0 million for the corresponding quarter in the prior year, due to higher losses from KAF and MFMA Development Sdn. Bhd. (MFMA).

Share of results of joint ventures in the current quarter under review recorded a profits amounting to RM0.3 million, lower by RM4.8 million as compared to the profits of RM5.1 million for the corresponding quarter in the prior year due to lower contribution from Airport Cooling Energy Supply Sdn. Bhd. (ACES) and Segi Astana Sdn. Bhd. (SASB).


Commentary On Prospects

MAHB’s network of airports recorded 26.9 million passengers in the current period under review from 1 January 2020 to 30 June 2020, a contraction of 60.5% over the corresponding period in the prior year. During the same period, the Group’s traffic for international and domestic passengers contracted by 63.6% and 57.7% respectively. Correspondingly, the Group’s aircraft movements decreased by 50.2% with both international and domestic aircraft movements decreasing by 54.7% and 47.2% respectively.

  1. Malaysia Operations

    Passenger traffic at MAHB operated airports contracted by 62.5% with 19.2 million passengers in the current period under review. Traffic for international and domestic passengers contracted by 65.4% to 9.0 million passengers and 59.5% to 10.2 million passengers respectively. International sector growth remains constrained for Malaysia due to the extended international border closure under the Recovery Movement Control Order (RMCO) phase. Nevertheless, with some easing of restriction that allows specific international travellers (such as medical tourists, expatriates, Malaysia My Second Home pass holders, foreign students, permanent residents and foreign spouses of Malaysians) to travel into the country, some recovery is expected in the upcoming months. The Government of Malaysia has also identified travel bubbles to six countries with reciprocal arrangements allowing flights and travellers to travel between established routes.

    June domestic traffic indicates a reopening phase of air travel for Malaysia, corresponding to the lifting of interstate travel ban announced in early June and provides some element of optimism. Moving forward, traffic recovery and return to travel are largely propelled by the travellers’ confidence to start travelling and access to connectivity. MAHB has continuously taken several measures to ensure the safety and health of travellers while adhering to the Standard Operating Procedures (SOP) by the National Disaster Management Agency, Ministry of Health and guidelines recommended by International Civil Aviation Organization (ICAO), International Air Transport Association (IATA) and Airport Council International (ACI). MAHB is also working closely with its ground handler and airline partners to ensure the highest level of safety for passengers and crew are in place.

  2. Overseas Operations

    ISGIA passenger traffic contracted by 54.4% to 7.7 million passengers in current period under review. International and domestic passenger contracted by 56.3% and 53.3%, respectively. ISGIA passenger movements experienced a decline in passengers following the suspension of flights imposed to certain countries in stages and later to all international destinations announced by the Government of Turkey from 27 March 2020 until 31 May 2020. ISGIA reopened for operation on 1 June 2020 and international flights to Turkey resumed on 11 June 2020 after Government of Turkey lifted notice to airmen (NOTAM) for Turkish airspace, allowing international flights to restart based on mutual, bilateral and health arrangement.

    The international movements performance for ISGIA, however, was modest compared to domestic movements as the international flights movements to a large degree depends on reciprocal arrangements between countries and their willingness to open border with Turkey. Pegasus, Pobeda and Anadolujet Airlines have resumed both domestic and international operations to more than 20 destinations collectively with international destinations mostly to Europe, Middle East and Central Asia. ISGIA's June traffic volume for both domestic and international is encouraging with Pegasus, Anadolujet and Pobeda Airlines keen on further increasing international capacity upon approval of the respective countries’ civil aviation authority. The pick-up of both domestic and international is a positive development in view of the capacity challenges due to travel restrictions and the current pandemic that persist. The airport is geared to meet the growing demand that indicates some recovery of growth with better domestic traffic that would initially lead the recovery.

  3. Outlook

    The International Monetary Fund (IMF) in June had revised the global economy growth forecast for 2020 and 2021 to -4.9% and +5.8% from -3.0% and +6.3% earlier estimates in April 2020. Bank Negara has forecasted that the Malaysian economy would register between -2.0% to +0.5% in 2020 while the Malaysian Institute of Economic Research (MIER) has estimated -2.9% contraction for the same period. IATA, ACI and ICAO collectively projected 2020 global traffic to be in the range of -48% to -62% for 2020, mostly due to the travel ban and restrictions imposed to contain the spread of pandemic. Malaysian Aviation Commission has revised Malaysia traffic for 2020 to be in the range of -48.7% and 50.3%. While Malaysia and ISGIA June traffic performances are encouraging, post lockdown demand for air travel is expected to be in stages with domestic sector leading the recovery. Resumption of international traffic is expected to be gradual mostly due to dependence on travel bubbles arrangements and a slower easing of border restriction as countries remain cautious and this is estimated to reflect a better traffic in the coming months.

    The introduction of the Malaysia - Singapore Reciprocal Green Lane, announced by the Ministers of Foreign Affairs of Malaysia and Singapore on 14 July 2020 is a welcome start for further relaxation in the opening of our borders. Meanwhile, MAHB is not letting up on efforts in ensuring a safe airport environment for travellers and restoring confidence in air travel. Recently, Malaysia Airports showcased several technology-enabled measures implemented at KL International Airport (KUL) to provide a contactless airport experience. These measures include facial recognition, self-check-in and bag-drop, contactless security screening and automated disinfection using ultraviolet (UV). More technology is also being explored by continuously benchmarking best practices at other airports around the world.

  4. Group Cost Optimisation Initiatives

    With the aviation industry affected by the unprecedented travel restrictions and bans, MAHB had taken immediate and pre-emptive measures to mitigate its impact by implementing an aggressive cost optimisation plan which will keep the Group relatively stable. The 18-month plan involves recalibrating operational efficiencies i.e. rebasing cost and prioritising capital expenditure to conserve cash reserves and ensure that the Group is able to meet its financial and operational obligations. The Group had also started to pare down non-essential operating costs with the aim of lowering it by at least 20%.