IJM maintains a positive outlook on the construction sector

Key highlights

• IJM is confident of securing more construction jobs in the near term
• Outstanding order book of RM 9.3 billion, consisting of high quality prominent projects. Recent significant project wins include construction of HSBC, UOB Tower 2, and PJ8 Uptown office towers as well as Solapur-Bijapur Indian tollway project
• Well-positioned (strong balance sheet and execution capability) to grow recurrent income base of concession and investment property assets. To build and develop Prudential office tower in TRX in line with strategy to grow recurrent income base through investment property assets
• Unbilled property sales of RM1.9 billion

PETALING JAYA, 27 February 2018 - IJM Corporation Berhad (“IJM”) today released its financial results for the third quarter ended 31 December 2017. Group consolidated revenue stood at RM1,566.2 million, representing a decrease of 1.9% from RM1,596.5 million reported in the same quarter a year ago following lesser revenue contributed by the Group’s Construction and Industry divisions. The Group also recorded a pre-tax profit for the current quarter of RM172.4 million, a decrease of 14.2% as compared to the same quarter last year, mainly due to lower contributions from the Group’s Property and Industry divisions. The decrease in PBT this quarter was also affected by a net unrealised foreign exchange loss of RM4.5 million as opposed to a net unrealised foreign exchange gain of RM3.9 million in the corresponding quarter of the preceding year.  

Construction division revenue this quarter decreased to RM572.5 million, 7.6% lower than the same quarter last year even though construction works at certain major infrastructural projects progressed as scheduled whilst supplemented by the progress achieved by projects that were secured in the previous year.

The Property division reported higher revenue, by 14.1%, to RM355.0 million as compared to the same quarter in the previous year on the back of better sales performance achieved as well as the completion of some projects during the current quarter.

Revenue of the Industry division decreased by 10.9% to RM261.4 million mainly due to lower sales volume of piles and quarry products delivered.

As a result of increased CPO sales volume arising from a larger area attaining maturity in the Indonesian operations, the Plantation division saw revenue increase by 2.1% to RM224.9 million as compared to the same quarter last year.

The Infrastructure division, however, recorded a marginal 0.3% decrease in revenue to RM151.8 million as compared to the same quarter last year due mainly to slightly lower cargo throughput handled by the Group’s port concession.

Quarterly PBT of the Construction division increased 3.0% to RM50.3 million as compared to the previous year’s corresponding quarter despite the decrease in revenue. Notwithstanding the higher revenue recorded, Property pre-tax profit for the current quarter decreased by 31.8% as compared to the preceding corresponding quarter as a result of the recognition of unrealised foreign exchange losses of RM13.8 million in the current quarter as opposed to gains of RM10.4 million in the same quarter last year. Following decreases in revenue, the Industry division saw its pre-tax profits decrease 51.4% to RM19.3 million.

Pre-tax profit for the Plantation division increased 12.2% to RM32.4 million mainly due to the net unrealised foreign exchange losses of RM3.6 million for the current quarter as compared to the net unrealised foreign exchange loss of RM16.9 million in the same quarter last year.

The Infrastructure division’s pre-tax profit for the current quarter increased to RM42.0 million compared to a loss of RM9.7 million in the previous year’s corresponding quarter mainly due to higher contribution from associates as well as the net foreign exchange gains of RM5.5 million for the current quarter compared to losses of RM47.9 million in the previous year’s quarter.

Underscoring his confidence in the Group’s outlook, Dato’ Soam Heng Choon, CEO & Managing Director, IJM Corporation Berhad said: “We secured RM2.7 billion worth of order book wins for the FY-to-date which include quality projects at TRX such as the new HSBC Malaysia headquarters, Menara Prudential and foundation works for Affin Group – in addition to the UOB Tower 2 and Uptown 8 office towers. In India, we recently announced the award of the RM1.5 billion Solapur-Bijapur tollway concession. These new contracts, underpinned by local infrastructure projects as well as a steady pipeline of large public infrastructure projects spurred by government initiatives, have helped expand our outstanding order book to a near-record high of RM9.3 billion.”

“The Group’s strong balance sheet puts us in a good position to expand the capacity of our concession and investment property assets. While executing some of the biggest projects in IJM’s history, we remain focused on building capacity and growing our recurring income base from projects such as the West Coast Highway, Kuantan Port New Deep Water Terminal (NDWT), The Light City in Penang, Menara Prudential and the Solapur-Bijapur Tollway.  Some of these concessions will soon enter commercialisation stage, starting with the operational commencement of Phase 1A of Kuantan Port’s NDWT in mid-2018.”

On the Group’s property division outlook, Dato’ Soam added: “The property market has stabilised and we are on track to achieve our sales target of RM1.6 billion for FY18. This is on the back of the positive response to our well-established townships in Bandar Rimbayu and Seremban 2 as well as recent launches. For example, the response to Riana South, Cheras was encouraging, with over 60% in bookings achieved within a month of its launch. The Group’s Property division expects to sustain its performance on the back of unbilled sales of around RM1.9 billion.”

The Group also has a fast maturing Plantation land bank profile to provide FFB production growth in the next few years. 

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About IJM Corporation Berhad

IJM Corporation Berhad (“IJM”), formed in 1983, is today one of Malaysia’s leading construction groups and is listed on Bursa Malaysia KLCI. Its business activities encompass construction, property development, manufacturing and quarrying, infrastructure concessions and plantations.

Headquartered in Selangor, its operations are located in 10 countries, with primary focus in Malaysia, India and Indonesia. The Group presently has a market capitalisation of around RM11 billion and as of February 2018, the Group employed around 4,800 employees and total assets of RM21.0 billion.

The Group’s belief in a shared destiny with its employees remains pivotal to its growing success while its reputation for professionalism, performance and good governance is acknowledged by customers and investors alike from its numerous corporate and industry accolades. IJM is committed to ethical business conduct and subscribes to the principles of good corporate citizenship for sustainable growth and development.