Axiata's full year results: Net profit dives 80%, Celcom disappoints

• Recorded a forex loss of RM685 million
• Celcom's net profit fell 25% at RM966 million

REGIONAL telecommunications company Axiata Group Bhd's 2016 full year net profit dived 80% to RM657 million, mainly due to higher foreign exchange loss and poor performance by its Malaysian unit Celcom Axiata Bhd.

During the year, the group recorded a forex loss of RM685 million, mainly driven by the US dollar exposed debt incurred from the US$1.3 billion acquisition of Ncell. 

The year also saw its wholly-owned unit Celcom register lower revenue and net profit of RM6.62 billion and RM966 million, 9.9% and 25% lower from the RM7.34 billion revenue and RM1.29 billion net profit recorded a year ago.

"Celcom didn't perform as well as we have expected. So, that is kind of disappointing," said Axiata president and group chief executive officer Jamaludin Ibrahim during a media conference in Kuala Lumpur earlier.

The group's Indonesian unit XL Axiata also recorded lower revenue and operating profit. During the year, XL's revenue fell 6.7% at 21.41 trillion rupiah (from 22.96 trillion rupiah in 2015) while net profit increased to 376 billion rupiah (from 25 billion rupiah a year ago). The jump in net profit was mainly driven by the sale of its towers.

Operationally, the company's earnings before interest, tax, depreciation and amortisation (Ebitda) fell 4% at 8.06 trillion rupiah.

Group's key metrics

During the fourth quarter, the group's revenue increased by 8% at RM5.79 billion, while suffered a net loss of RM309 million (versus a net profit of RM467.2 million same quarter a year ago).

At the group level, Axiata recorded a 8.5% growth in revenue at RM21.56 billion for the full year period -- slightly lower than the targeted growth of 12%.

In fact, it missed another three headline key performance indicators (KPIs).

The company, which targeted to grow its Ebitda by 16% in 2016, only managed a 10% growth (in actual currency). 

It was also expecting its return on invested capital (Roic) and return on capital employed (Roce) to be 6.8% and 6.1%. However, the Roic and Roce fell short at 4.5% and 4%, respectively.

This year, Axiata group expects revenue to grow by 9-11%, and Ebitda to grow by 7-9%. 

It is also expecting its Roic and Roce to be around 4.5-5% and 4-4.5, respectively.

The company is also setting aside RM6.6 billion in capital expenditure, about RM500 million more than what it spent in 2016 (RM6.1 billion). 

Possible lower dividend payout, shares fell

Jamuludin also hinted that the company may lower its dividend payout ratio for 2017.

"We need to have a more cautious approach...," said Jamaludin.

The company, which has yet to announce the dividend payout ratio for 2017, has proposed a payout ratio of 50% for 2016 (or dividend per share of 8 sen).

This is the lowest payout ratio since 2010 when it paid 30% of its earnings to shareholders as dividend. From 2011 to 2015, its dividend payout ratio ranges from as low as 60% (2011) to as high as 85% (in 2015).

At press time (4:12pm), the company's shares fell 5.8%, or 28 sen, at RM4.52 each. 

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