KTMB expected to record a profit for the first time in two decades
Potential turnaround contributed largely by passenger ticket sales, says CEO
KERETAPI Tanah Melayu Bhd (KTMB), the country’s largest rail service, is expected to announce its first profit after over two decades of losses, said its chief executive officer (CEO) Mohd Rani Hisham Samsudin.
KTMB, which had lost almost RM3 billion since its corporatisation in 1992, was likely to register a net profit for the fiscal year 2017, he told NST Business. It posted net profits of between RM9 million and RM15 million from 1993 to 1995.
Bernama reported in February that the group posted an unaudited profit before tax of RM4.6 million for last year.
Mohd Rani said the major contributor to profit is passenger ticket sales.
He said the profitable ETS (electric train service) and shuttle services between Johor Baru and Woodlands in Singapore would ensure KTMB remained profitable year-on-year.
KTMB will also be capitalising on the cargo business for growth, he said.
“When I came into KTMB, I realised what we needed to do first was not to transform the business but to change the working culture and attitude.
“KTMB has about 5,700 employees. The first thing we did was to address the union on what they wanted to do and what we should do. That way, we all understood the situation of the company and worked towards that direction, the division of roles and functions and common agenda to develop and grow the company.
“We have to run KTMB as a business entity. There are performance-based Key Performance Indicators for everyone,” he said.
Mohd Rani said those who do not improve will be asked to leave.
“We have to measure and increase the productivity by improving revenue and reducing the cost per employee,” he added.
Mohd Rani was appointed CEO on September 15 last year. A graduate of Northrop University, he was the CEO of KL Airport Services Sdn Bhd (now known as Pos Aviation Services Sdn Bhd) under DRB-HICOM Bhd.
Prior to that, he served as the CEO of Senai Airport Terminal Services Sdn Bhd, and CEO of Johor Port Logistics, both units of MMC Corp Bhd.
Mohd Rani said his first key task upon joining KTMB was to stop the losses in the company. “It is a challenge to turn around KTMB, but I took on theresponsibility as I believe it can be profitable. Besides engaging with the staff, we have been reviewing contracts that were outsourced and unprofitable routes.
“Either we cancel off the services or look at other ways to improve passenger volume, despite the constraints from the track rehabilitation under KVDT1 (Klang Valley Double Track) project as it limits the frequency of trains and the number of cargo wagons in one rake,” said Mohd Rani.
The company started to bleed again from 1996 and has been trying for almost two decades to turn around its fortunes despite its top management changes and injection of funds by the government.
An audit in 2011 showed that KTMB incurred RM100 million in losses, which almost tripled to RM280 million in 2012. In fiscal year 2015, KTMB posted a net loss of RM226.25 million.
Low fares were among the main factors that have led to KTMB racking up losses. The fares for the commuter service are now 10.8 sen per kilometre (km) compared with 15 sen per km for Light Rapid Transit services.
The services could break even if fares were to rise by two or three sen per km.
The other main contributing factor was KTMB’s high operational cost in maintaining its rail coaches and infrastructure, besides high electricity and diesel consumption and manpower costs.
In 2015, employee benefits totalled RM294.5 million, which was 57 per cent of the RM515.8 million revenue the company recorded that year.
It was reported that as a result of the deteriorating conditions of KTMB’s rolling stock, coaches and infrastructure in the east coast and south, nearly 40 per cent of the group’s operating expenses is spent on manpower costs.