Axiata’s Q2 net profit falls 30.5%

PETALING JAYA: Axiata Group Bhd's net profit slumped 30.5% to RM447.82 million in the second quarter ended June 30, 2014 (Q2 FY14) from RM644.77 million a year ago due to foreign exchange (forex) losses as a result of the weakening Indonesian rupiah, integration of Axis in Indonesia and lower contribution from its Malaysian operations.
"It was a mixed quarter for the group. Whilst Celcom, the Axis acquisition and forex translation dragged earnings in the short term, overall good operating performance was seen in all other markets," Axiata president and CEO Datuk Seri Jamaludin Ibrahim said yesterday.
Axiata's revenue rose 2.2% to RM4.73 billion from RM4.63 billion while earnings per share were 5.2 sen compared with 7.6 sen. The group declared an interim dividend of 8 sen a share.
In the first half, its earnings fell 10.8% to RM1.12 billion from RM1.26 billion in the previous corresponding period. Its revenue rose 1.5% to RM9.25 billion from RM9.11 billion.
Commenting on its results, Axiata said with its well-diversified portfolio of assets, the group showed significant resilience amidst short-medium term impact of Axis integration and forex losses due to the weakening of the Indonesian Rupiah.
"Almost all the group's operating companies (OpCos) posted good quarterly growth with Robi Axiata Limited (Bangladesh) and Smart Axiata Company Limited (Cambodia) performing exceptionally well.
Revenue for the group was up 1.5% to RM9.2 billion year-to-date basis (YTD), which at constant currency would have been higher at 5%.
"Earnings before interest, tax, depreciation and amortisation (ebitda) declined by 3% YTD due to the impact of the acquisition of Axis. Profit after taxation and minority interests (Patami), fell 11% due to lower group ebitda and forex losses at XL," it added.
Axiata said until June 30, 2014, the Indonesian Rupiah had fallen by almost 12% since the beginning of the year.
Data continued to be the main growth driver, up 27%. Data revenue showed strong growth in all markets driven by increased smartphone penetration. Data now accounts for 20% or more of the revenues in Malaysia and Indonesia.
Regional mobile subscribers grew 11.7% to over 250 million and Axiata continues to be one of the largest telcos in the region.
Jamaludin said he was pleased with the performance in all its growth and emerging markets.
"The decline of the Indonesian Rupiah had an impact to the results but the bulk of the forex losses was unrealised. Strong performance was posted by Dialog, Robi & Smart. Smart in particular had a stellar first half with double digit growth across all financial metrics.
"Celcom's performance in the quarter could have been better but we know exactly what the issues are and we are confident that they will be resolved within the next few months," he added.
Jamaludin said the enhanced network quality will continue to be the key agenda for Celcom and good progress has already been made in network optimisation and LTE coverage expansion.
"At more than 70% of service revenue, voice and SMS still make up the bulk of our business but momentum in data is growing fast. In light of this, we have remained aggressive in our investments in data, but monitoring closely to ensure our investments are targeted and done at the most opportune time and in line with the growing demand," he added.
Celcom's gross revenue decreased by 3.2% in Q2 FY14 driven by lower revenue from voice and particularly SMS although broadband revenue continued to show an uptrend growth of 23.2%.
In Q2, Celcom's operating costs grew 2.3% mainly from increase in content provider charges and network related costs.
"Consequently, ebitda in the period decreased by 10.2% while pre-tax profit declined 7.2% to RM468.4 million," it said.
Moving forward, Jamaludin said said currency volatility would still be a concern but its business remains strong and it would continue to execute strongly on its strategy to deliver long term growth.
"Based on the performance so far, at constant currency and barring any external factors that could materially affect our performance in the second half of the year, we expect the group performance to be in line with the KPIs albeit at slightly lower revenue growth," he concluded.