Khazanah Nasional Bhd (Khazanah) reported a steady overall performance for 2020 despite the volatility in global financial markets and an unfavourable economic environment impacted by the Covid-19 pandemic.
In a statement today, the sovereign wealth fund said its profit from operations fell to RM2.9 billion last year from RM7.4 billion in 2019.
Dividend income from investee companies rose to RM5.2 billion from RM3.8 billion but was offset by lower divestment gains of RM2.7 billion compared to RM9.9 billion in 2019.
It said the impact of the Covid-19 pandemic led to higher impairments of RM6 billion, particularly in aviation and hospitality assets, compared to RM4.9 billion in the previous year.
Khazanah declared a dividend of RM2 billion for 2020 to the Malaysian government.
"Our performance in 2020 was accomplished against the backdrop of a challenging economy and an unprecedented impact on the operating environment caused by the Covid-19 pandemic.
"Despite these challenges, we were able to build on our efforts in recent years, allowing us to navigate the economic uncertainty," managing director Shahril Ridza Ridzuan said.
He said Khazanah identified good investment opportunities during the pandemic and ensuing market volatility.
"Khazanah continues to diversify our global portfolio as we build sustainable value for Malaysia as part of our long-term mandate," he added.
Khazanah said its financial position remained strong with debt reduced by six percent to RM43.1 billion from RM45.8 billion in 2019, while realisable asset value (RAV) cover fell slightly to 2.9 times from 3.0 times.
As of the end of 2020, the Commercial Fund’s RAV stood at RM95.3 billion, while the Strategic Fund’s portfolio RAV stood at RM27.9 billion.
Khazanah said various measures taken to curb the spread of COVID-19 resulted in the tourism, hospitality and aviation sectors taking a considerable hit.
It had to impair several assets, namely RM3.1 billion for Malaysia Airlines’ parent Malaysia Aviation Group Bhd (MAGB) and RM1.8 billion for Themed Attractions Resorts & Hotels, to account for these effects.
Looking ahead, Shahril Ridza said 2021 would continue to be a challenging year.
“Even as the National Covid-19 Immunisation Programme begins, the vaccine roll-out in Malaysia and across the world will take time,” he said, adding that in key sectors such as aviation and tourism, it was unlikely that a full recovery would happen before 2023.
In continuing to be prudent and vigilant in these testing times, Khazanah has identified five strategic priorities for the coming years.
Shahril Ridza said the priorities included further enhancing commercial returns, delivering impactful value via strategic investments, becoming a responsible organisation through embedding ESG (environmental, social and governance) considerations across all investment activities, building a strong digital and technology foundation and, finally, investing in its people to achieve a culture of high performance and collaboration.
“As we gradually expand our global assets portfolio to move away from a reliance on domestic sources of income, we are hopeful that Malaysia as a whole will move towards increasing its economic complexity and do more to make it easier for businesses to open, including further deregulation.
"This will lead to a more resilient and diverse economy to mitigate future negative shocks. Being the sovereign wealth fund for Malaysia, Khazanah will continue to focus on investing to deliver sustainable value for all Malaysians," he added. - Bernama
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