Maldives state-owned enterprises earned profit of US$97m in Q1 2019

State-owned enterprises collectively earned a net profit of MVR1.5 billion (US$97 million) in the first quarter of 2019, according to a quarterly analysis released on Thursday by the Privatisation and Corporatisation Board.

The collective net profit was up 24 percent compared to the same quarter last year.

The highest profit was posted by the Maldives Airports Company Ltd with MVR572 million – which represented a 44 percent growth from Q1 2018 – followed by the Bank of Maldives with MVR276 million and telecom Dhiraagu with MVR238 million.

The net profit of the behemoth State Trading Organisation was MVR103 million, a 123 percent increase from the corresponding quarter.

The Maldives Ports Limited, Fenaka Corporation, Malé Water and Sewerage Company and Island Aviation Services also increased profits. The Maldives Marketing and Public Relations Corporation turned a profit of MVR34 million from a loss in Q1 2018.

But the net profit of Dhiraagu, the State Electricity Company, and the Housing Development Corporation – tasked with the urban development of the capital’s suburb Hulhumalé – declined significantly in the first quarter.

“Net profit of HDC reduced as a result of revenue loss though they had a reduction in certain costs. Profit of STELCO also has taken a downturn after being unable to manage the rising costs,” the report noted.

The report revealed that HDC’s debts have increased by MVR4.2 billion while equity only increased by MVR55 million.

“The company has the capacity to pay off the debts with their share capital as they have high retained earnings. However due to lack of liquidity the company depends on government assistance in servicing debt.”

At a cost of MVR12 billion, HDC’s ongoing projects include the Hiyaa housing project, airport link road project and electricity and ICT ducting for Hulhumalé phase two.

The Maldives Transport and Contracting Company’s finances meanwhile deteriorated significantly due to falling revenue, resulting in a net loss of MVR45 million.

“As the company primarily depends on government projects for its profitability, lack of government projects during the transition period and election period has reduced company’s revenue,” the report explained.

“However the company is not able reduce the work force as the company is expected to fully utilise the resources once the new government starts awarding the projects.”

Other loss-making companies included the Addu International Airport, Business Centre Corporation, Kahdhoo Airports Company, Maldives Centre for Islamic Finance, Maldives Hajj Corporation, Maldives Integrated Tourism Development Corporation, Maldives Sports Corporation, Maldives Waste Management Corporation, and Hazana Ltd (presently in the process of liquidation).

Despite a net loss, WAMCO decreased losses by MVR29.6 million, which represented a 96 percent improvement in profitability.

Addu International Airport’s loss resulted from depreciation and high expenses such as salaries. “However, compared to Q1 2018 the loss has been reduced by 54% which is a good sign in terms of the profitability of the business,” the report observed.