IJM Corporation Berhad’s (IJM) corporate debt rating has been upgraded from A to A+ reflecting its consistently strong financial results, the ability to sustain its competitive position domestically and internationally and the diversity of its business. The moderating factor includes the increasing competitiveness in the domestic construction environment compounded by the difficult building materials industry, and the volatility in each business segment in which it operates.

IJM is a diversified group with five main divisions, namely construction, properties, manufacturing and quarrying, plantation and infrastructure projects. IJM’s construction business remains the key revenue contributor to the group. Despite the weakened sentiment in the domestic construction industry, IJM’s construction revenue increased to RM961.5 million (FY2002: RM953.8 million). IJM’s outstanding order book stood at RM2.31 billion as at April 2004 consisting mainly of domestic contracts, totalling RM2.05 billion. Despite the intense competition, the Group still believes that the construction sector offers decent prospects in the form of many small contracts. IJM’s firm footing in the Indian construction industry has helped to cushion the impact from the difficult domestic construction industry. Although IJM’s intensive management of projects has helped mitigate the impact of the rising building materials prices on the group, IJM is cautious on the effects the developments in the building materials industry has on the progress of its projects.

IJM’s property development arm recorded significant improvement in revenue with contributions from its property developments in Penang, Klang Valley, Negeri Sembilan, Johor and Sandakan as well as the sale of non strategic land. Going forward, gross development value to be launched between 2004 and 2005 amounted to RM1.01 billion. IJM has also made headway in India’s property development market with its maiden project, Raintree Park – Kukatpally, a range of low to high end housing development; which recorded good response with 90% take up rate, upon its first launching.

Better all round performance from the quarry and ready mixed concrete operations led to improved contributions from the manufacturing and quarrying sector. Pre-tax profit improved significantly to RM20.9 million in FY2003 (FY2002: RM8.3 million).

Under IJM Plantations Bhd (IJMP), its plantation division has benefited from the strong CPO price during the financial year. Contribution from the division is limited to the equity-accounted profit in IJMP of 49.35%; at about 17% of Group pre-tax profit.

IJM’s off-shore ventures’ contribution is expected to improve with the completion of Swarna Tollway in India, in which IJM has a 35% stake, and the expected commencement of tolling in 2004. IJM also has stakes in other ventures in China, Argentina, Vietnam and Chile. The geographical diversity, however, exposes IJM to political and local currency risks in the countries in which it operates in.

IJM’s financial profile remained strong with stable margins, low debt leverage and good debt servicing capacity.