THE RM12.5 billion electrified double-tracking rail project has not experienced any cost overrun despite the rising prices of steel and diesel, a partner of the main contractor said.
MMC Corp Bhd chief executive officer for Malaysia, Hasni Harun, said that one of the two key concerns of the project was the need for 140,000 tonnes of steel bars, which the company had not locked in at current price.The higher cost of diesel is another challenge. Crude oil climbed to a new record of near US$130 (RM420) a barrel yesterday.
"We have put in a hedging policy for the diesel. For steel bars, our bid price in the contract still provides enough margin to buffer the higher cost. It's still within our price," Hasni told reporters after its shareholder meeting in Kuala Lumpur yesterday.
"There's no cost overrun at the moment and we have already received RM208 million from the goverment," he added.MMC is part of an equal partnership, with Gamuda Bhd as the main contractor of the rail project.
Hasni also said that MMC plans to sell other non-core assets in the next two years to focus on its utilities, logistics, and engineering and construction businesses.
Its non-core assets include a rubber glovemaker; a weatherstrip manufacturing firm; Kramat Tin Dredging, which is under revamp; and an oil and gas design engineering firm.
The utilities division was MMC's main earnings driver last year, contributing 62 per cent to its pre-tax profit. The logistics business accounted for 30 per cent and engineering and construction, five per cent.
On another matter, Hasni denied market speculation that its 39.2 per cent-owned engineering firm, Zelan Bhd, would be taken private."We have no intention to take the company private and we are not boosting the stake. Zelan is also lowly-geared and we have no plans to sell IJM shares via Zelan," he said.Zelan holds 9.6 per cent of IJM Corp Bhd.
Nevertheless, he admitted that the group's gearing, at 2.7 times last year with a total debt of RM19.3 billion, is "a little stretched". A big chunk of the borrowings is from power producer Malakoff Bhd. "Borrowings at the holding company are only RM1.2 billion, which will be cut to RM850 million once we sell all the remaining Sime Darby shares that we own," Hasni said, adding that it plans to sell the Sime Darby shares this year if market conditions permit.Meanwhile, group chief executive Feizal Ali said the company is targeting a more balanced mix of its profit base after 2012.
At present, domestic business accounts for over 98 per cent of its earnings.Outside Malaysia, the group has only two power assets in Jordan and Oman through its 51 per cent-owned subsidiary Malakoff Bhd.MMC is also part of the master developer of a US$30 billion (RM97 billion) project in Saudi Arabia, known as the Jazan Economic City.MMC also actively pursues power assets abroad, Malakoff managing director Ahmad Jauhari Yahya said.The group is eyeing Southeast Asia and the Middle East for buying opportunities, he added.
以上新闻转载自Business Times
Picture: Mariah Carey
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