The fall in profits by Maldives Transport and Contracting Company (MTCC) in 2018 has been attributed to the massive losses it incurred for its public transport services following the opening of the Sinamale’ Bridge.
MTCC has been providing its public transport services at a recurrent loss. The bulk of its income from the sector is generated through its bus and ferry series in the Greater Male’ Area.
The company underwent major restructuring in the last quarter of 2018 with the opening of the Sinamale’ Bridge. It cut down its ferry services between Male’ City and Hulhumale’ and restructured bus services within Hulhumale’. Bus services over the bridge between Male’ City and Hulhumale’ were contracted to Maldives Ports Limited (MPL).
MTCC’s 2018 annual report shows the company incurred a MVR 82 million loss in its public transport sector due to these factors – nearly double the MVR 56 million loss it incurred in the sector in 2017.
MTCC’s Chairman, Mohamed Faheem remarked in the annual report that the lack of profitability in its public transport services was resulting in an overall loss to the company. He said the company was currently negotiating with the Maldivian government to subsidize the service.
“Given the government’s decision to expand public transport services, we project the losses incurred in this sector will further worsen in the coming one-year period as MTCC expands its services,” said Faheem.
CEO Hassan Shah wrote in his statement that the income generated from transport services by the company in 2018 remained unchanged compared to 2017, but that the loss incurred was a 44 percent increase compared to 2017.
“The increase in losses in this sector is mainly due to a drop in demand for sea transport services with the opening of the Sinamale’ Bridge, and the loss incurred by the company in its ferry services in the atolls,” said Shah.
He also noted a fall in infrastructure development and construction projects by the company compared to 2017.
The company also incurred a MVR 13.60 million loss in dredging – which had traditionally been one of its more profitable business sectors. The loss has been attributed to the high cost of financing the loan taken out to purchase its dredger, Maha Jarraaf, and low cost land reclamation projects.
MTCC, overall, generated an income of MVR 1.28 billion in 2018 – which is 0.85 percent less than its income in 2017.
The company generated MVR 34.76 million as profit before tax, decreasing its profit per share from MVR 28 to MVR 4.
Due the fall in its profit in 2018 and the first quarter of 2019, the company’s Board has decided to hold off dividend payouts this year. The motion will be called to vote at its annual general meeting scheduled for Monday, July 8.