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Cost savings to give MAHB extra RM70mil profit

6 December, 2008

THANKS to the cost-saving initiative and revenue-enhancing strategies undertaken by Malaysia Airports Holdings Bhd (MAHB), it can expect at least RM70mil in additional pre-tax profit for the financial year ending Dec 31 (FY08).

This would imply that MAHB ought to be making at least RM473.64mil in pre-tax profit for FY08.

For the nine months to Sept 30, MAHB recorded a 12.34% increase in revenue to RM1.15bil while net profit jumped 35.59% to RM247.97mil. Pre-tax profit increased 35.67% to RM248.22mil.

"It is impressive what MAHB has achieved for the nine-month period, especially in boosting its non-aeronautical segment.

"The fourth quarter is normally weaker as MAHB generally reports higher taxes during that period, and revenue from plantations will not be significant, given the lower crude palm oil prices," said an analyst with a local research house. "Let us see whether they will achieve their target."

Meanwhile, MAHB managing director Datuk Seri Bashir Ahmad said the company had done well despite its airport charges being one of the lowest in the world (about 2%), and with its services not being compromised.

Up to Nov 30, passenger arrivals for all airports handled by MAHB increased 5.4% to 42.8 million. Of this, KL International Airport (KLIA) received 15.8 million while the low-cost carrier terminal (LCCT) received nine million. The LCCT is expected to hit the 10 million mark by year-end.

Bashir is expecting a 1% to 2% passenger growth for 2009. While revenue may decrease, MAHB would remain profitable, driven by its non-aeronautical division (retailing, food and beverage as well as advertising), he said.

"Some people say KLIA looks very empty. That is because KLIA was built to be spacious. It has an average space of 55 sq m per passenger compared with an average space of 25 sq m (per passenger) for most airports," Bashir said.

In the last five years, MAHB has reduced cost, increased efficiencies and boosted its non-aeronautical division.

Presently, revenue contribution from the non-aeronautical segment is almost equal to the aeronautical segment compared with a 55:45 ratio five years ago.

On a year-on-year basis, the operating profits from the retail division improved by 190.2% to RM14.1mil in the third quarter.

MAHB is now expanding its retail space in KLIA by 930 sq m. The retail space in LCCT will be increased to 30% from 10% presently. The expansion will be completed by the end of next year.

MAHB has also received proposals for its commercial development plan in the KLIA vicinity.

Having earmarked 931ha, MAHB plans to build hotels, shopping malls and office lots in its bid to further diversify its earnings base.

Bashir said development works would begin in the next one to two years.

This article is a verbatim copy of the original article from The Star.

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