PETALING JAYA: Khazanah Nasional Bhd, which saw its profit from operations fall 60% to RM2.9bil in 2020 due to the economic impact of the Covid-19 pandemic, has declared a higher dividend of RM2bil for the year.
Managing director Datuk Shahril Ridza Ridzuan said the higher dividend was needed to aid the government in the current challenging environment.
“Given what happened in 2020 and the extraordinary pressure that the government had come under to support the economy, we believe the higher dividend payout would help during this time, ” he said yesterday during a virtual press conference on the sovereign wealth fund’s performance last year.
“Whether we will continue to pay higher dividends in the future will depend on needs and our capabilities to do so, ” Shahril added.
Khazanah had declared a dividend of RM1bil for 2019.
In 2020, Khazanah’s dividend income from investee companies rose to RM5.2bil from RM3.8bil but was offset by lower divestment gains of RM2.7bil compared to RM9.9bil in 2019.
The sovereign wealth fund said the impact of the Covid-19 pandemic led to higher impairments of RM6bil, particularly in aviation and hospitality assets, compared to RM4.9bil in the previous year.
Its financial position remained strong with debt reduced by 6% to RM43.1bil from RM45.8bil in 2019, while realisable asset value cover fell slightly to 2.9 times from three times.
When asked about expectations for 2021, Shahril said global markets have continued to hold up pretty well, adding however that markets in certain sectors were overvalued.
“There’s tension in place now between where markets are today and valuations in the future, especially if there’s a tightening of liquidity or interest rates and that is one of the key factors that will drive any performance on the part of Khazanah going forward.
“The majority of our investments are in Malaysia and we are looking at a gradual shift in this, but it will take time, ” he said.
Separately, Khazanah, as the sole shareholder of Malaysia Aviation Group Bhd (MAG), which in turn is the parent company of Malaysia Airlines, said in a statement that it will continue to provide full support and close cooperation in the comprehensive efforts to ensure the national carrier’s sustainability post-pandemic.
“Moving forward, MAG will focus on working closely with the government and stakeholders on restarting air travel and promoting industry recovery, as well as continuing cash conservation while capturing demand recovery as part of its internal restructuring.”
Shahril said some of the MAG creditors that had approved of the debt-restructuring exercise had opted for a debt-to-equity conversion, which would mean that Khazanah would no longer be the sole shareholder of MAG, despite the exercise only being a “minor dilution”.
He also said there were no guarantees that Malaysia Airlines would turn around post-restructuring exercise.
“Part of the problem pre-Covid is that Malaysia has had an oversupply situation in its aviation industry for a very long time.
“As a result of the pandemic, it is inevitable that some form of consolidation in the industry will happen, as demand has collapsed across the world.
“However, you still need a national airline to connect you to the world, to bring in valuable cargo and supplies like the vaccines, which Malaysia Airlines has been at the forefront of.”
Shahril said the global aviation industry could potentially start to turn around as early as 2023, following a “rough 2020”.
Meanwhile, Khazanah said the 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 stood at RM95.3bil as at the end of 2020.
The 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 realisable asset value stood at RM27.9bil as at Dec 31,2020, decreasing by 15% from RM32.9bil a year ago.