MANAMA: Mumtalakat Holding Company, the sovereign fund of the Kingdom of Bahrain, swung back into black by reporting a net profit of BD82.7million in 2013, compared to a net loss of BD181.7 million a year ago.
Mumtalakat in a statement said that it achieved solid financial results in 2013, thanks to robust financial and operational performance across the Mumtalakat group, constituting of 38 portfolio companies, (Group) and demonstrate significant progress in the implementation of strategic initiatives undertaken in 2012.
“Our 2013 results reflect a positive year across the Group. The year saw us consolidate on the strategic and organisational initiatives implemented during 2012, leading to a significant increase in net profit for the year. Performance was strong across our diversified investment portfolio, with principal companies contributing positively, in spite of challenging market conditions in some sectors,” Mumtalakat’s Chief Executive Officer, Mahmood Hashim Al Kooheji, said.
“We remain committed to enhancing and creating value at our portfolio companies to support their contribution to the economy of the Kingdom. Our emphasis on adherence to the highest standards of corporate governance and transparency has once again placed us in the top tier of global peers in relation to transparency. Furthermore, we are confident that our financial clarity, combined with our prudent investment strategy and emphasis on sustainable value creation, will continue to drive our business forward.”
Despite the decrease in group revenues for the year by 5.6% to BD 1.1 billion, the rigorous cost management at Gulf Air led to an 11.5% reduction in direct costs to BD988 million, resulting in an increase in gross profit of 135% to BD 109.4 million. Improved focus on operational efficiencies and cost control contributed to a 204% increase in operating income to BD 70.7 million from 23.2 million. Net result was a profit of BD 82.7 million compared to a loss of BD 181.7 million, with the majority of the increase driven by significantly lower impairment losses and improved operating performance across portfolio companies, in particular Gulf Air.
Lower revenues at Gulf Air contributed to the overall decrease in Group revenues. This follows the closure of unprofitable routes, an initiative implemented as part of the restructuring undertaken in 2012. The decrease in revenues was offset by the substantial cost efficiencies achieved as a result of strategic initiatives, with the airline’s operational loss declining to BD 95.4 million in 2013 from BD 183.8 million in 2012. Gulf Air’s net loss after one-time restructuring costs, impairments and government grants declined to BD 12 million in 2013 from BD 81.5 million in 2012.
Aluminium Bahrain (Alba) performed well against a backdrop of challenging market conditions combined with an 8% drop in LME aluminium prices in 2013. The company made a positive contribution to Group revenues on the back of higher aluminium premiums and sales volumes, with 2013 revenues of BD749.3 million.
Share of profits from principal associate companies increased to BD46.5 million in 2013, with Bahrain Telecommunications Company (Batelco) and National Bank of Bahrain contributing BD15.4 million and BD24.7 million respectively. National Bank of Bahrain reflected improved performance in the financial services sector, in addition to enhanced internal processes and cost controls.