Revenue for SOEs soars, operating costs surge causing profits to drop

Profits recorded for state-owned companies in the first quarter of 2024, have dropped by 20 percent.

According to the financial review of State-Owned Enterprises (SOEs) for the first quarter of 2024 by the Privatization and Corporatization Board (PCB), while SOEs made a revenue of MVR 13.09 billion in the first quarter of 2023, the figure surges to MVR 13.74 billion in the first quarter of 2024.

Profits for the first quarter of 2024 have decreased by 20 percent.

According to PCB, a total profit of MVR 1.69 billion was earned in the first quarter of the year, a decline in comparison to the MVR 2.10 billion profit earned during the same period last year.

Financial experts note that the increase in SOE revenue coupled with a decrease in profits is a cause for concern, indicating either increased expenses or a decline in operational efficiency.

In terms of assets, the total assets of SOEs stood at MVR 167.54 billion in the first quarter of 2023.

In the first quarter of 2024, the value of assets rose to MVR 186.39 billion.

However, the debt of SOEs has also increased along with this growth.

It has been revealed that the loan ration increased by 11 percent with debt rising to MVR 33.82 billion in the first quarter of the year.

Maldives Airports Company Limited (MACL)’s loans and debts increased by 23 percent in the first quarter of the year, with Fenaka Corporation’s loans having surged by 106 percent.

According to experts, the increase in SOE debt indicates that many SOEs are financing their operations by borrowing money on a repayment basis.

The total revenue of government-owned companies receiving budget assistance reached MVR 215 million in the first quarter. They however reported a total loss of MVR 75 million.

Housing Development Corporation (HDC)’s revenue increased by seven percent which is MVR 1.05 billion, with net profits dropping by 85 percent, to MVR 90.85 million.

While the Bank of Maldives (BML)’s financial situation appears to be stable, revenue increased by 10 percent to MVR 1.22 billion. BML's net profit is to have declined by two percent to MVR 492.66 million.

Gross profits recorded by the Maldives Transport and Contracting Company (MTCC) decreased by 97 percent, with net profit falling by 88 percent to MVR 5.24 million in the first quarter of the year.

Although State Trading Organization (STO)'s revenue increased by one percent, the company’s net profit decreased by 28 percent.

The government's funding for company operations increased by three percent.

As such, MVR 58.91 million was disbursed in the first quarter of 2023, with the amount increasing to MVR 60.47 million in the same period this year.

In addition to this, the subsidy assistance increased by two percent from MVR 1,194.36 million issued in the first quarter of last year, to MVR 1,219.92 million in the first quarter of this year.

Capital injection to companies increased from MVR 151.19 million to MVR 164.94 million.

In the first quarter, HDC received the largest capital amount from the government, at MVR 400 million. STO received MVR 359.33 million and Fenaka received MVR 249.87 million

Further, SDFC received MVR 30 million and Island Aviation received MVR 16.47 million.

Among the government-owned companies that received budget assistance included RACL, having received MVR 24.90 million, FDC having received MVR 10.58 million, Maldives Post having received MVR 2.50 million and MSCL having received MVR 1.12 million rufiyaa in assistance from the government in the first quarter.