KUALA LUMPUR (Nikkei Markets) - Malaysia Airports Holdings, which operates the Kuala Lumpur International Airport, said Friday its first-quarter net profit surged nearly four-fold from a year earlier thanks to lower depreciation and better local operations.
Net profit for the three months ended March 31 totalled 62.01 million ringgit ($14.26 million) against 17.01 million ringgit a year ago, the company said in an exchange filing. Quarterly revenue rose 7.3% year-on-year to 1.09 billion ringgit from 1.02 billion ringgit.
"With the current trend of traffic, the budgeted 6.5% passenger traffic increase for Malaysia operations is attainable," Malaysia Airports said. "There are some positive developments in March for Turkey, which reflects an encouraging outlook" for its Turkish operations, it added.
Malaysia Airports also operates the Kuala Lumpur International Airport 2, the operations base of Asia's largest budget airline by fleet AirAsia, and over three dozen smaller airports in the country. The company also owns the Istanbul Sabiha Gokcen International Airport in Turkey.
While its local operations benefitted from increase in passenger traffic as well as lower depreciation charges, the company's overseas operations suffered a loss following lower revenue and higher markdown for the value of its assets in Turkey.
Passenger movement at its Malaysian airports rose 10.5% to 23.39 million in the latest quarter from a year earlier, while traffic at Sabiha Gokcen fell 7.5% year-on-year to 6.57 million movements.
Analysts said despite the strong start, Malaysia Airports' operations in Turkey remained a key earnings concern amid political unrest and lingering effects of a slew of previous terror attacks.
"We remain cautious on its Turkey operation considering the high number of terrorist attacks in Turkey, which could deter travellers and negatively impact passenger growth," said Affin Hwang Investment Bank's analyst Aaron Kee.
The ISG airport, acquired in 2015, has been a key growth driver for Malaysia Airports until a string of bombings last year and political unrest crimped tourist inflows to Turkey. That could linger for months ahead, prompting foreign visitors to shy away from the country that straddles Europe and Asia.
Still, local operation remains a bright spot for the company. "Malaysia Airports will continue benefit from the return of Chinese tourists into the country," Kee said.
Last month, China banned travel to South Korea in a move that steered tourists towards Southeast Asia instead, according to ForwardKeys, a travel research firm. Airline bookings to Malaysia from China for travel between March 16 and August 31 surged 72% year-on-year, it added.
Shares of Malaysia Airports rose 1.3% to 7.60 ringgit on Friday, while the benchmark FTSE Bursa Malaysia KLCI ended relatively flat.
-- Jason Ng and Gho Chee Yuan
-- Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.