Key highlights:

• Revenue and earnings bounces back with strong year-on-year growth following fewer operational disruptions arising from Covid-19 movement control restrictions in Q1 FY2022 compared with Q1 FY2021
• Significant recovery in PBT, taking into account the RM91.4 million foreign exchange gains in Q1 FY2021
• Despite macro uncertainties, the Construction Division’s RM586 million of contract wins thus far in FY2022 is encouraging
• Property sales of RM700 million in Q1 FY2022 is the highest quarterly sales since 2014.
• Strong cash reserves and healthy net gearing ratio of 0.43 times provide resilience to tide through any short-term challenges

Petaling Jaya, 24 August 2021 – IJM Corporation Berhad (IJM) today released its financial results for the first quarter ended 30 June 2021 (Q1 FY2022).

Group Financial Performance

Group revenue for Q1 FY2022 increased 48.4% to RM1,305.9 million from RM879.8 million reported in the corresponding quarter last year. The increase in revenue was seen across all business divisions, with the Movement Control Orders (MCO) impacting the final month of the current quarter compared to almost two months in the corresponding quarter last year. Similarly, the Group’s profit before tax (PBT) increased by 76.9% to RM166.8 million in the quarter (Q1 FY2021: RM94.3 million). 

CEO & Managing Director of IJM, Mr Liew Hau Seng, explained: “Despite the improvement in the quarter’s results, the Group’s performance was, nonetheless, affected due to the re-imposition of stringent movement control measures by the government to contain the resurgence of the Covid-19 pandemic at the end of May. During the lockdown, certain businesses such as the Group’s Port and Toll operations, which were classified as essential activities, were able to operate, although at lower capacities due to reduced business activities and lockdown restrictions affecting our customers. ”

Compared to Q1 FY2021, revenue and PBT of the Construction Division increased by 31.3% and 82.5% this quarter to RM377.5 million and RM29.9 million, respectively, mainly due to higher construction activities, improved gross profit margin and lower finance cost.

Likewise, the Property Division reported higher revenue and PBT of RM332.1 million and RM32.7 million, respectively, in Q1 FY2022, or an increase of 127.9% and 453.6%, respectively, compared to the corresponding quarter last year. This was primarily because of higher construction activities, improved gross profit margin and lower finance cost recorded during the quarter. In addition, the positive profit contribution from the Division’s joint venture projects and favourable currency movements (Q1 FY2022: gain of RM1.9 million; Q1 FY2021: loss of RM5.7 million) also contributed to the better financial performance.

The Industry Division saw an increase in revenue and PBT by 90.9% and 151.2%, respectively, to RM163.3 million and RM7.6 million in Q1 FY2021 from higher deliveries of piles, quarry products and ready-mixed concrete in the quarter.

Revenue of the Infrastructure Division increased by 4.0% to RM161.2 million whilst pre-tax profit increased by 211.0% to RM12.2 million compared to Q1 FY2021. The sharp rise in the pre-tax profits is primarily due to higher local traffic volumes, coupled with lower share of losses in associates, partially offsetting the lower profit contribution from the Group’s port operations as its customers’ operations were restricted by the lockdown.

The Plantation Division reported a 31.9% increase in revenue for the current quarter to RM271.7 million mainly due to higher commodity prices recorded by both its Malaysian and Indonesian operations. However, the division recorded a lower pre-tax profit of RM83.1 million as compared to RM115.3 million in Q1 FY2021, due to a lower net foreign exchange gain of RM3.8 million recorded in the current quarter. This compares with a forex gain of RM91.7 million recorded in Q1 FY2021 when the Indonesian Rupiah recovered strongly against both the US Dollar and the Japanese Yen.

Prospects for the Coming Financial Year

Although the Group saw an improved performance in Q1 FY2022, the prolonged movement restrictions during MCO3.0 is expected to weigh on the financial performance of the Group in the first half of FY2022. Given that revenue and profits of the Construction and Property Divisions are dependent on progress recognition, the duration of the stringent lockdown during MCO3.0 is likely to have an adverse impact on the financial performance of these Divisions in the first half of FY2022. Likewise, as part of the construction supply chain, the Industry Division’s financial performance is also expected to be affected until the lifting of lockdown measures. The Group’s Port and Toll operations, which are classified as essential activities, have been able to operate, although at lower capacities due to reduced business activities and lockdown restrictions affecting their customers. Nevertheless, the Plantation Division continues to operate in a good CPO price environment and is expected to contribute positively to the Group’s financial performance until its disposal.

Despite these operating challenges, the Group’s financial performance in the first half of FY2022 is expected to be bolstered by a sizeable one-off gain from the disposal of IJM Plantations. The financial performance of the Construction, Property, Industry and Infrastructure Divisions should recover in the second half of FY2022 when operational activities are recommencing.

To address the short-term economic uncertainties, the Group has implemented appropriate response measures, focusing on cost containment, prudent capital management and cash preservation. Notwithstanding the prolonged movement restrictions weighing on the Group’s first half of FY2022, the Group’s fundamentals remain solid, anchored by a healthy balance sheet (net gearing of 0.43 times and gross cash balance of RM2.5 billion).

“As at end-June 2021, we have an outstanding construction order book of RM4.0 billion that comprises a good mix of private and public sector projects that provides us with good earnings visibility over the next few years. Recent job wins such as infrastructure works at TRX, the Mezzo Residential Tower at The Light City, Penang, and substructure works at the Sungai Pahang Bridge section of the ECRL, totalling RM586 million, is an encouraging start to the financial year,” said Mr Liew.

On the Group’s Property Division, led by IJM Land, Mr Liew said: “IJM Land’s sales in the first quarter of FY2022 of RM700 million is one of the highest quarterly sales achieved by the Division. This demonstrates that demand is still healthy for quality products at the right pricing for the respective locations.” During the quarter, the Division launched the Mezzo Residential Towers in Penang as well as numerous landed property products at its established townships, which have received good responses from the market.

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

IJM will be conducting its 37^th Annual General Meeting on 26 August 2021, which will be held virtually.

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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 RM6.7 billion and as of June 2020, the Group employed around 3,800 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