PETALING JAYA: Khazanah Nasional Bhd’s profit from operations fell 61% to RM2.9 billion in 2020 from RM7.4 billion in 2019, on the back of the volatility in global financial markets and an unfavourable economic environment impacted by the Covid-19 pandemic.
The impact of the pandemic led to higher impairments of RM6 billion, particularly in aviation and hospitality assets, compared with RM4.9 billion in the previous year. Khazanah had to impair several assets, namely RM3.1 billion for Malaysia Airlines Bhd’s (MAB) parent Malaysia Aviation Group Bhd (MAG) and RM1.8 billion for themed attraction resorts & hotels.
Khazanah managing director Datuk Shahril Ridza Ridzuan (pix) said on Thursday the sovereign wealth fund declared a dividend of RM2 billion for 2020 to the government.
Dividend income from investee companies rose to RM5.2 billion from RM3.8 billion but was offset by lower divestment gains of RM2.7 billion compared with RM9.9 billion in 2019.
Khazanah’s financial position remained strong with debt reduced by 6% to RM43.1 billion from RM45.8 billion in 2019, while realisable asset value cover fell slightly to 2.9 times from 3 times.
As for the performance of its two funds, its commercial fund generated a two-year rolling time-weighted rate of return of 1.5% against its long-term targeted return of Malaysian Consumer Price Index +3% on a five-year rolling basis. The commercial fund’s realisable asset value (RAV) stood at RM95.3 billion as at the end of 2020.
Meanwhile, its strategic fund recorded a gain of 0.3% in 2020, against the targeted rate of return of the 10-year Malaysian Government Securities yield on a five-year rolling basis.
The strategic fund’s portfolio RAV stood at RM27.9 billion as at Dec 31, 2020, decreasing by 15% from RM32.9 billion a year ago, heavily impacted by the fall in market value of key listed assets and provisions made on impairments to aviation and hospitality assets.
Looking ahead, Shahril said 2021 will continue to be a challenging year and in key sectors such as aviation and tourism, it is unlikely that a full recovery will happen before 2023.
In 2021, Khazanah will continue to rebalance commercial portfolio and diversification to prepare for a post-Covid world, undertake asset restructuring or value creation to adjust for post-Covid structural changes, integrating sustainability across investment and operational activities and pursue investments in new sectors with economic and social benefits for Malaysia.
The current portfolio rebalancing has presented opportunities for both divestment gains and dividend flows from its investments. Khazanah continues to deploy investments in a prudent manner, taking advantage of volatility to seek opportunities in global markets.
“We have identified five strategic priorities for the coming years. These priorities include further enhancing our commercial returns, delivering impactful value through our strategic investments, becoming a responsible organisation through embedding ESG considerations across all investment activities, building a strong digital and technology foundation and finally, investing in our people to achieve a culture of high performance and collaboration,” Shahril said.
Khazanah is gradually expanding its global assets portfolio to move away from a reliance on domestic sources of income. Global assets formed the bulk of its income last year.
