Khazanah sees return to profitability
KUALA LUMPUR: Khazanah Nasional Bhd expects to return to profitability in the financial year ending Dec 31, 2019, on the back of low impairments and better market outlook.
Managing director Datuk Shahril Ridza Ridzuan said the sovereign wealth fund’s performance in 2018 was impacted by several key global and domestic developments in the economic and social spheres.
“At the same time, the government initiated a reset of Khazanah which involved significant changes, including a fresh mandate.
“The organisational restructuring we are currently undertaking will enable us to execute and deliver on our role of growing Malaysia’s long-term wealth, beginning this year,” he told reporters during Khazanah’s Annual Review 2019 yesterday.
Khazanah recorded a pre-tax loss of RM6. 27 billion in 2018 compared with a pre-tax profit of RM2.89 billion a year earlier.
Last year, the fund’s profitability was affected due to fewer divestments, reduced dividend income and higher impairments, during a period of transition for Khazanah in an unfavourable market.
Khazanah’s portfolio value as measured by its net worth adjusted (NWA) declined to RM91 billion as at Dec 31, 2018, a 21.6 per cent drop from RM116 billion year-on-year.
In 2018, the sovereign wealth fund had declared a dividend of RM1.5 billion.
Realisable asset value fell to RM136 billion from RM157 billion during the same period.
The long- term portfolio performance remained on an upward trajectory, with NWA achieving an 11 per cent return per annum over the last 10 years.
“Last year was a difficult year for the market globally and not just Malaysia. Everything ended up in negative territory for 2018. This resulted from a number of factors, including global political tensions,” said Shahril Ridza.
Khazanah’s portfolio was further impacted by domestic developments in 2018 due to regulatory changes, subdued earnings outlook and market volatility.
The market performance of the core companies the fund invested in, including Axiata (- 26.9 per cent), Telekom Malaysia Bhd (-56.9 per cent), Tenaga Nasional Bhd (7.9 per cent), IHH Healthcare (-7.6 per cent), CIMB (-9.3 per cent) and Malaysia Airports Holdings Bhd (-3.3 per cent), fell in 2018.
Khazanah said it would focus on executing its portfolio rebalancing strategy and strengthening its financial position in 2019.
“We will also be developing policies, guidelines and processes for the dual-fund structure, namely commercial and strategic funds, as well as restructuring and enhancing internal capabilities to deliver on our refreshed mandate,” it added. — Bernama