KUALA LUMPUR: Khazanah Nasional Bhd, which posted a pre-tax loss of RM6.27 billion in 2018, expects to return to profitability in 2019, said managing director Datuk Shahril Ridza Ridzuan.
“Looking at 2019, we’re comfortable with the fact that we should be able to see profitability, given that a lot of clean-up that we’ve done for 2018 has gone through the books. We don’t anticipate any large impairments that we have to go through again in 2018 and that puts Khazanah’s balance sheet on a good standing,“ he told a media briefing at the Khazanah Annual Review here today.
Khazanah was in the red in 2018, compared to a pre-tax profit of RM2.90 billion a year earlier due to fewer divestments, reduced dividend income and higher impairments, during a period of transition for Khazanah in an unfavourable market.
Impairments stood at RM7.3 billion in 2018, RM5 billion higher than 2017’s RM2.3 billion. The fund declared a dividend of RM1.5 billion for 2018.
Khazanah last posted an annual pre-tax loss in 2005, while the last annual net loss was in 2008.
Shahril said its performance in 2018 was impacted by several key global and domestic developments in both the economic and social spheres. At the same time, the government initiated a reset of Khazanah, which involved significant changes, including a refreshed mandate.
Khazanah’s portfolio as measured by its net worth adjusted (NWA) declined to RM91 billion on Dec 31, 2018, a 21.6% drop from RM116 billion on Dec 31, 2017. Realisable asset value (RAV) skidded to RM136 billion from RM157 billion during the same period. However, the long-term portfolio performance remained on an upward trajectory, with NWA achieving an 11% return annually over the last 10 years.
Khazanah’s portfolio was affected by global economic uncertainty in 2018, which saw markets underperform due to geopolitical tensions and a pessimistic growth outlook for emerging markets.
In addition, the portfolio was impacted by domestic developments, including a subdued earnings outlook, market volatility and regulatory changes during the period under review.
Shahril said about half of the impairments was from Malaysia Airlines. But for Malaysia Airlines and all companies under Khazanah, he said the primary responsibility for working out a viable strategy should rest with the management and boards of those companies.
“We’re waiting for Malaysia Airlines’ management and board to complete their review of their strategy and revert to us shareholders for our input and for us to then discuss with the government on the level of support.”
Shahril also clarified that Khazanah is not in talks with any parties at present for the sale of Legoland Malaysia in Johor. Legoland Malaysia was a great success with positive earnings, he said, in response to reports that it was weighing the sale of the theme park.
Source: The Sun Daily