Axiata Group posts net loss of RM106.38mil in Q2

Axiata NORAFIFI EHSAN / The Star

KUALA LUMPUR: Axiata Group Bhd registered a net loss of RM106.38 million in the second quarter (Q2) ended June 30, 2022, from the net profit of RM277.76 million recorded in the same quarter a year ago.

In a statement today, the telco company said this was mainly due to unrealised foreign exchange losses from Dialog Axiata PLC and Axiata due to the strengthening US dollar, higher taxes in the form of the one-off Cukai Makmur in Malaysian entities and surcharge tax in Dialog and net finance cost.

Revenue in Q2 increased 4.9 per cent to RM6.7 billion from RM6.39 billion.

For the six months, Axiata registered a net loss of RM149.35 million from the net profit of RM353.32 million, while revenue grew 5.8 per cent to RM13.17 billion from RM12.45 million.

“With Covid-19 impacts clearly behind us, a majority of our operating companies have delivered solid operational results in the first half of 2022, mostly outperforming in their markets,” Axiata joint acting chief executive officer Vivek Sood said.

“With the improved operational performance, we are likely to exceed the headline key performance index (KPI) for the year both in terms of revenue excluding device as well as earnings before interest and taxes (Ebit) growth.”

Vivek added that forex impact and macro headwinds, especially in Sri Lanka, Bangladesh and Nepal, had adversely impacted group earnings.

“To stem the tide, our immediate focus will be directed towards integrating new acquisitions, managing USD liquidity and inflation, especially in frontier markets and easing out the balance sheet stretch,” he said.

Axiata joint acting chief executive officer Dr Hans Wijayasuriya said that in the medium-term, the group is cognisant of risks such as increased energy costs, global chip supply shortages and higher interest rates.

“We are also keeping a close watch on the impact of merger and acquisition (M&A) transactions, specifically the timing of completion, impact to gross debt to Ebitda and delivery of synergies.

“Moving forward, we are confident of the learnings that can be applied Group-wide from Project Resilience – a Collective Brain initiative being piloted to steady Dialog against intense headwinds and macroeconomic pressures.

“In recalibrating for growth, the aim is to improve the business topline, optimise and rescale costs whilst aggressively adopting technology and analytics to protect the product, network and service experience.

“Ultimately, we want to enhance resilience and drive long-term value creation group-wide to benefit the customers and communities we serve as a regional digital champion,” Dr Hans said.

On a reported basis, the group’s year-to-date (YTD) revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 5.8 per cent and 7.4 per cent, respectively, mainly contributed by all operating companies (OpCos) except Dialog and Ncell Axiata Ltd.

Axiata said that within the quarter, the group achieved cost excellence through capital expenditure (capex) and operational expenditure (opex) savings of RM388 million and RM257 million, totalling RM645 million in savings.

The group’s balance sheet reflected its growth-fueled activities, with a

gross debt to Ebitda of 3.03x, net debt to Ebitda of 2.48x and a cash balance of RM6.6 billion.

It said the capital structure was prudently managed despite the challenging macroeconomic climate, with 48 per cent of loans in local currency, while 43 per cent of loans are on fixed rates and 62 per cent with more than two years of maturity.

Against a backdrop of the strengthening greenback, 40 per cent of US dollar loans are hedged with a natural hedge of 43 per cent.

The group has deferred from declaring an interim dividend for the quarter, in light of macroeconomic headwinds, particularly in frontier markets in which the group operates.

Source: New Straits Times


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