Key highlights:

• Revenue and earnings impacted by temporary suspension of the Construction, Property and Industry operations during Covid-19 movement control restrictions
• Contract wins in 2020 collectively added RM1,709 million to the construction order book
• Plantation Division recovered most of the foreign exchange losses incurred in the immediate preceding quarter
• Strong cash reserves and healthy net gearing ratio of 0.48 times provide resilience to tide through any short-term challenges

Petaling Jaya, 26 August 2020 – IJM Corporation Berhad (IJM) today released its financial results for the first quarter ended 30 June 2020 (1Q FY2021). Group revenue for 1Q FY2021 declined 43.0% to RM879.8 million from RM1,543.6 million reported in the corresponding quarter last year. The decline was across all business divisions, with the exception of the Plantation Division. The Group’s profit before tax (PBT) decreased by 35.0% to RM93.2 million in the quarter (1Q FY2020: RM143.4 million). 

CEO & Managing Director of IJM, Mr Liew Hau Seng said that the performance was weaker because most of the Group’s business segments had to adhere to a temporary suspension of operating activities due to movement control measures imposed by the government to contain the spread of the Covid-19 virus. In Malaysia, the Movement Control Order (MCO) spanned over six weeks, starting from 18 March to 3 May 2020.  During this period, certain businesses such as the Group’s Port, Toll and Plantation operations, that were classified as essential activities, were able to operate, albeit at subnormal capacities due to lower business activities and in adherence to new standard operating procedures.

Due to the business disruptions, revenue and PBT of the Construction Division declined by 44.5% and 59.6% this quarter to RM287.5 million and RM16.4 million respectively, compared to the corresponding quarter last year.

The prolonged closures of sales galleries and site work stoppages resulted in the Property Division reporting revenue of RM145.7 million in 1Q FY2021; 68.5% lower than RM462.4 million registered in the corresponding quarter last year. The Division incurred a loss before tax of RM10.4 million in the quarter compared to a pre-tax profit of RM45.9 million a year ago.

The Industry Division saw a decline in revenue by 63.0% to RM85.6 million in 1Q FY2021 from lower deliveries of piles, quarry products and ready-mixed concrete due to minimal construction activity during the MCO. Following this, the Division sustained a loss before tax of RM14.9 million in the quarter as compared to a PBT of RM15.2 million in 1Q FY2020.

Whilst Kuantan Port’s operational revenue was relatively stable, the Infrastructure Division’s revenue for the current quarter decreased by 22.0% to RM155.0 million mainly due to lower local and overseas tolled traffic volumes as a result of the movement control measures implemented. Although traffic volumes began recovering towards the end of the quarter following the resumption of economic activities, the Division reported a pre-tax loss of RM11.0 million for the quarter compared to a PBT of RM44.4 million in 1Q FY2020. At present, traffic volumes have improved close to pre-Covid-19 levels.

The Plantation Division reported a 54.8% increase in revenue for the current quarter to RM206.0 million mainly due to higher commodity prices and sales volume of crude palm oil (CPO). The overall FFB production for the current quarter increased by 18.8% due to the recovery of crop production in the Division’s Malaysian operations, larger planted areas having attained maturity and moving into prime age in its Indonesian operations. During the quarter, the Indonesian Rupiah recovered strongly against both the US Dollar and the Japanese Yen to record a net foreign exchange gain of RM91.7 million (1Q FY2020: Gain of RM0.2 million) on foreign currency denominated borrowings. As a result, the Division recorded a significantly improved PBT of RM115.3 million compared to a pre-tax loss of RM5.4 million in the corresponding quarter of last year. Its fast-maturing land bank profile in Indonesia is expected to provide FFB production growth in the coming years.

The impact of the MCO on the Group’s operations in the quarter corresponds to the marked second quarter contraction in Malaysia’s GDP of 17.1%. To address the short-term economic uncertainties, the Group has implemented appropriate response measures, focusing on cost containment, prudent capital management and cash preservation. The Group’s healthy balance sheet (net gearing of 0.48 times and gross cash balance of RM2.1 billion) are expected to provide resilience through these difficult months. While the Group expects a challenging short- to medium-term macro outlook, the Group’s fundamentals remain solid.

Addressing the recent weakness in the Company’s share price, Mr Liew attributed it to possible selling activities by index-based funds following the MSCI announcement on 12 August of the Company’s deletion from the Index.

“We have a healthy outstanding construction order book of RM5.5 billion that comprises a good mix of private and public sector projects which provide us with good earnings visibility over the next few years. Recent job wins such as The Light City’s retail mall and convention centre, as well as TRX Residences are high quality projects that allow us to demonstrate our construction capabilities as well as our ability to introduce vibrant integrated property offerings into the market,” said Mr Liew.

On the Group’s Property Division, led by IJM Land, Mr Liew said: “IJM Land’s aim has always been to design the right product with the right pricing for the respective locations of its properties. Post-MCO, we have seen a decent take-up of mid-range properties (including high-rise developments) priced between RM400,000 and RM900,000.”

Phase 1 and 2 of IJM Land’s recently launched Starling, consisting of 273 units in total with a combined GDV of RM189.4 million at Bandar Rimbayu project, was fully booked within a day of their respective launches.

“IJM Land has also been adapting its strategies to respond to the challenging financing landscape arising from the Covid-19 situation. Launched this month, IJM Land’s 'Now You Can' homeownership campaign introduces low-interest rates, a savings plan, and high rewards to prospective homebuyers. Financial coverage is also provided in the event of a loss of employment or a pay cut, providing assurance to aspiring homebuyers. Moving forward, IJM Land’s strategies would also be highly flexible with customised plans and solutions to suit individual needs and requirements.”

On Kuantan Port, Mr Liew added: “The opportunities for Kuantan Port are sizeable and the expansion of Phase 1 of the New Deep Water Terminal has been very timely to capture the growing cargo throughput from the Malaysia China Kuantan Industrial Park (MCKIP). As we continue to see interest from new FDIs into MCKIP, coupled with the Government’s commitment to supporting infrastructure development in the area, predominantly through the ECRL project, we are confident that Kuantan Port will play a pivotal role in the economic development in the East Coast region.”

Consistent with the Group’s past practices, no dividend was declared in the first quarter.

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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. Its business activities encompass construction, property development, manufacturing and quarrying, infrastructure concessions and plantations.

Headquartered in Selangor, its operations are located in 8 countries, with primary focus in Malaysia, India and Indonesia. The Group presently has a market capitalisation of around RM4.8 billion and as of June 2020, the Group employed around 4,100 employees and has total assets of RM23 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.

For more information, visit www.ijm.com

For media enquiries, please contact:

Ms. Mandy Chen, Corporate Communications, at mandychen@ijm.com or + 60 12 607 6121

Mr. Shane Guha Thakurta, Investor Relations, at shanethakurta@ijm.com or + 60 3 7985 8041