Syahrunizam said the group’s performance for FY24 will be driven by cost optimisation rather than a focus on the topline.
PETALING JAYA: UEM Edgenta Bhd
will emphasise optimising costs and monetising investments after recognising the impact of the elevated operating expenses had on its financial year ended Dec 31, 2023 (FY23) earnings.
Managing director and chief executive officer Syahrunizam Samsudin said the group’s performance for FY24 will be driven by cost optimisation rather than a focus on the topline.
“Externally, business wise, we are good. We just need to manage costs a lot more aggressively,” he told reporters and analysts during the group’s FY23’s results briefing.
Syahrunizam said the group aims for a 10% reduction in operating expenditure (opex) which should translate to anticipated savings of RM20mil to RM30mil.
He acknowledged the stickiness in facing cost challenges but said the initiative is expected to have a direct positive impact on the bottom line.
“In navigating these challenging times, our strategy is to get leaner not just with people, but also processes,” he added.
For the final quarter of FY23 (4Q23), UEM Edgenta’s revenue increased by about 14% year-on-year (y-o-y) to RM806.94mil but earnings tumbled by about 89% to RM2.35mil.
Syahrunizam highlighted that despite the profit downturn, UEM Edgenta maintains a healthy financial position, with a low gearing ratio of 0.3 times and cash and bank balances totalling RM644.2mil as of Dec 31, 2023.
For FY23, UEM Edgenta’s revenue grew by 14.1% to RM2.88bil compared to the RM2.52bil recorded in FY22, while net profit shrunk by about 33% y-o-y to RM30.84mil.
Syahrunizam said while revenue grew, profits faced challenges due to increased material costs including from vendors and subcontractors along with the effects of minimum wage increases across some of its markets, leading to margin compression.
Despite these obstacles, the company managed to secure substantial projects, recording new wins of RM2bil for the year.
“This strong order book replenishment puts us in a good position, particularly when you look at more than 50% coming from international wins,” Syahrunizam said.
He noted that 43% of the new wins secured in FY23 involve technology-enabled solutions.
Due to the ongoing cost optimisation efforts, Syahrunizam foresees better earnings for 1Q24.
The group has successfully achieved cost savings of RM81.8mil from FY21 to FY23, and is on track to meet its target of RM100mil savings.In terms of the top line, Syahrunizam said the group is on track to meet its target of a compound annual growth rate (CAGR) of 12% over a five-year period from FY20.
However, for FY23, the dividend per share decreased by 50% to two sen, compared to the four sen dividend reported in FY22.
Looking ahead, Syahrunizam expressed the group’s aim to return four sen per share to its shareholders.
He anticipates a rebound in FY24 for the asset management and infrastructure solutions company, as the group managed to expand its clientele in key markets.
Additionally, he said the company will concentrate on operationalisation and integration in its high-growth markets to achieve better cost optimisation.
