Malaysia's Khazanah 2020 profit down 60% as divestment gains fall

[KUALA LUMPUR] Malaysia's sovereign wealth fund Khazanah Nasional reported on Thursday its operating profit fell about 60 per cent last year to RM2.9 billion (S$952.9 million) as divestment gains fell sharply amid the coronavirus pandemic.

The fund said in a statement that 2021 will continue to be a challenging year, with key sectors such as aviation and tourism not expected to recover until 2023.

Profits slumped from a record RM7.4 billion in 2019, with divestment gains falling to RM2.7 billion compared to RM9.9 billion in 2019.

It also logged impairment charges of RM6 billion, largely in aviation and hospitality assets affected by the pandemic, compared to RM4.9 billion a year ago.

Dividend income, however, rose 36.8 per cent to RM5.2 billion and its financial position strengthened with debt dropping 6 per cent to RM43.1 billion, it said.

The fund made RM10 billion worth of investments last year and managing director Shahril Ridza Ridzuan said it was in talks with the government to pursue investments in new sectors, without specifying them.

"I think the government is very keen to see about how a long-term investor such as Khazanah can do its part to help spur investments into the sectors," he told a virtual press briefing, noting this could include building up new industries and new entrants as well as partnering with the private sector.

Khazanah, which in 2019 restructured its portfolio into commercial and strategic holdings, said the commercial fund's realisable asset value (RAV) was RM95.3 billion at the end of 2020.

Its strategic fund, which houses Malaysia Airlines, had a portfolio RAV of RM27.9 billion.

Khazanah is the main shareholder of the national airline and had last month committed new capital of RM3.6 billion to fund the business throughout until 2025.

The fund declared a dividend of RM2 billion to the government, double what it distributed in 2019.

REUTERS