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Equities trading revenue was down 60 per cent to RM19.5 million, while derivatives trading revenue fell 23 per cent to RM9.4 million.

Bursa Malaysia Bhd (1818) said its first quarter net profit dropped 63 per cent to RM15.5 million as low equities trading during the period hurt its revenue.

It expects a challenging year ahead as the global economy awaits more definite signs of recovery.

While its business depends on the performance of the securities and derivatives markets, the stock exchange operator said the implementation of the government’s stimulus measures would mitigate the impact of the global recession on the domestic economy.

Bursa Malaysia added that the smooth leadership transition augured well for the Malaysian capital market.
“While investors are generally waiting for clearer signals of economic recovery from global markets, the volume of trading activity in our market has seen a slight rebound this month, which speaks of improved sentiment and confidence in the market’s fundamentals,” Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said in a statement issued yesterday in Kuala Lumpur.

In the three months ended March 31 2009, Bursa Malaysia’s revenue declined 37 per cent to RM64.15 million from a year ago.

Equities trading revenue was down 60 per cent to RM19.5 million, while derivatives trading revenue fell 23 per cent to RM9.4 million.

Quarterly velocity was 23 per cent due to lower trading volume in the securities market.

The number of derivatives contracts traded fell 21 per cent to 1.38 million, but interest in Bursa Malaysia’s crude palm oil futures contract (FCPO) remained strong.

Both FCPO and Kuala Lumpur Index Futures products are expected to remain key revenue drivers for its derivatives market.

Stable revenue comprising depository services, listing fees, broker services and participants’ fees dropped 14 per cent to RM22.7 million.

However, the group’s total operating expenses were 4 per cent lower at RM42.2 million as a result of the cost-management efforts it undertook.

“Bursa Malaysia is in active cash-conservation mode, exercising prudent cost-management and cost-cutting measures.

” We aim to cut down on our budgeted operating expenses and capital expenditure by 15 per cent,” Yusli said.

He also said that the final gross dividend of 7.8 sen per share for its financial year 2008 will be paid out to shareholders on May 4.

Bursa Malaysia will continue to seek opportunities for strategic alliances or business collaborations, and look to launch its Bursa Commodity House, the FTSE Bursa Malaysia KLCI, and streamline its boards in the coming months.

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Managing director Datuk Seri Idris Jala said tough economic times presented opportunities for consolidation. Companies with huge financial muscle will have the flexibility to act should opportunities come knocking. Malaysia Airlines (MAS) is looking to acquire another airline with its surplus cash. As at Dec 31, 2008, MAS had a cashpile of RM3.57bil.

“People always ask why we keep so much cash. We are positioning ourselves so that when the chance comes, we will be ready to grab it. In the next two to three years, if the economic downturn persists, we won’t even have to go looking. Opportunity will present itself to us,” he told StarBiz after the launch of MAS’ Stimulus Package yesterday.

Jala said as early as two years ago, MAS had been doing studies on some 30 airlines. The two key criteria that MAS looked at were strategic fit and synergy value.

“When looking at the synergy value, 1+1 must be 3. If 1+1 is 2, then we won’t do it,” he said.

While 2008 had been especially tough for the airline industry with many companies having downsized, undergone restructuring and even gone bust, Jala said MAS was ready because it had been running this “marathon” over the last three years.

For 2009, MAS is aiming to save some RM700mil through continuous cost-cutting and efficiency measures. Over the last three years, MAS has reduced cost by a total of RM2.3bil.

“I am quite convinced that MAS has the stamina and is built to ride through the current times. We are doing everything we possibly can to counter this economic downturn,” Jala said.

“We have completed the structural changes that were needed for MAS. If you notice, other airlines are now only embarking on their cost-cutting and manpower measures. With these issues out of the way, MAS can focus solely on innovating and achieving its target of being a five-star value carrier.”
Datuk Idris Jala … is confident that MAS can ride through the current times.

The MAS Stimulus Package is an innovative array of nine deals, covering first, business and economy-class travel.

Jala especially sees potential in the “Kids Fly Free” and “Weekend Getaway” packages, as these segments are likely to create new revenue that the company never had before.

“I’ve always been hearing people saying that they get cheaper first-class tickets for their international flights. I feel that our flights are just as competitive. So I challenge these people now. If you can show me the proof (through a ticket that has been purchased within the last three months), then we will match that price,” he said.

Meanwhile, MAS confirmed that there were no more discussions with Qantas with respect to the maintenance, repair and overhaul joint venture since the memorandum of understanding expired recently.

MAS adopts a competitive hedge policy, where it hedges its fuel requirement based on what its competitors are also doing.

About 64% of its fuel requirement has been hedged at US$100 per barrel.

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In a press conference today, Nestle (M) Bhd reported that they posted a 6.37% increase in net profit to RM100.35mil for its first quarter ended March 31, from RM94.35mil a year earlier, due in part to higher revenue and better operational efficiency and cost control measures.

Revenue increased by 6% to RM983.93mil, compared with RM927.69mil previously.

Earnings per share was 42.79sen, compared with 40.23 sen previously.

Nestle S.A. executive vice-president and zone director for Asia, Oceania, Africa and Middle East, Datuk Frits Van Dijk, said Nestle S.A. had so far performed reasonably well despite the tough economic environment.

He said it was still early days and that it was difficult to predict Nestle S.A.’s performance this year.

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