Brahim’s Q2 net loss due to MAS settlement agreement

PETALING JAYA: Brahim's Holdings Bhd made a net loss of RM6.81 million in the second quarter ended June 30, 2015 (Q2) compared with a net profit of RM1.56 million a year ago mainly due to continued concessions given to Malaysia Airlines Bhd (MAS) under the settlement agreement dated Feb 26, 2015.
Revenue for the quarter fell 27.34% to RM67.09 million from RM92.34 million a year ago, it said in a filing with Bursa Malaysia earlier.
During the quarter, its in-flight catering and related services saw a segmental loss from operations of RM4.98 million compared with a profit of RM10.42 million a year ago while revenue fell 28.11% to RM64.39 million from RM89.57 million a year ago.
"The lower revenue resulted in an operating loss arising from price suppression implemented by MAS under its Recovery Plan as well as the concessions agreed with MAS under the Settlement Agreement," it said.
In the food and beverage (F&B) segment, losses narrowed to RM201,000 from RM438,000 a year ago largely due to the positive outcome arising from the implementation of a turnaround plan for this segment.
However, revenue for the segment fell 23.75% to RM597,000 in Q2 from RM783,000 a year ago due to reduced consumer spending on F&B across the board, as a result of the Goods and Services Tax (GST) implementation.
Meanwhile, the logistics and related services segment saw a 17.42% rise in profit to RM364,000 in Q2 from RM310,000 a year ago while revenue fell 2.6% to RM1.87 million from RM1.92 million a year ago.
Brahim's said the segment's revenue contribution remains on track and warehouse occupancy rate continues to remain stable.
For the six months ended June 30, 2015, it reported a net loss of RM3.97 million compared with a net profit of RM5.72 million a year ago while revenue fell 17.31% to RM152.81 million from RM184.81 million a year ago.
For the financial year ending Dec 31, 2015, Brahim's expects the meals volume revenue from MAS to be consistent with the previous period but profit margins from the in-flight catering and related services segment may be affected by the implementation of the new catering agreement effective Sept 1, 2015.
Revenue from foreign airlines however, are expected to improve due to incoming new airline clients in the third quarter.
"In the non-in-flight catering business, we are embarking into operating airport lounges commencing with Emirates Lounge and Malindo Lounge. We are also currently looking into operating cafe outlets at private universities and providing hot meals/refreshments on board the KTM Electronic Train System," it said.
The F&B segment's losses are expected to be narrowed gradually in the coming quarters after the implementation of the turnaround plan while the logistics segment is expected to continue its "stable business trend" in its warehousing services and forwarding business.
Meanwhile, its subsidiary Dewina Host Sdn Bhd obtained a contract extension for three years until 2018 at Kuala Lumpur International Airport and will continue to operate F&B outlets at the airport. It also expects improvement in revenue from its operations at klia2.