DUBAI: Bahrain's Mumtalakat will remain profitable from now on, its chief executive said, as the sovereign fund ended five straight years of losses in 2013 due to improved performance at Gulf Air and lower impairments.
The fund, fully owned by the Bahraini state but run on a commercial basis, made a net profit of 82.7 million dinars ($219 million) in 2013 compared with a net loss of 181.7 million dinars in the previous year, a statement said.
The profit was driven "by significantly lower impairment losses and improved operating performance across portfolio companies, in particular Gulf Air", the statement added.
"We are very hopeful that we are now on the right path and growth and profitability will stay with us going forward, that I can assure you," Mahmood Al-Kooheji, chief executive of Mumtalakat, said.
"We're out of the red and we'll not be back there again, God willing."
Mumtalakat has struggled in recent years due to problems in its home market, namely a local real estate crash followed by Arab Spring-inspired unrest in the Gulf Arab kingdom.
The fund has also been weighed down by Gulf Air, the loss-making carrier which has undergone a series of cost-cutting measures to help turn around its fortunes.
Bahrain's national carrier, which cut routes and staff during a five-year restructuring, narrowed its net loss to 95.4 million dinars in 2013 from 183.8 million dinars a year ago.
For Mumtalakat, route closures fed through to a 5.6 percent dip in group revenue but this was offset by cost reductions at the airline.
"It's a temporary drop (in revenue) and now we will grow slowly but surely, with routes based on commercial viability," Kooheji said.
Mumtalakat, which saw its assets under management at the end of 2013 edge up to 2.71 billion dinars ($7.2 billion), holds stakes in 38 firms mainly in Bahrain’s nonoil sector, including Bahrain Telecommunications Co (Batelco) and Aluminium Bahrain (Alba).
The fund has traditionally focused on Bahrain but has been casting its eyes outside the kingdom in recent months for acquisitions, and could clinch two deals in the near future, Kooheji said.
The CEO would not be drawn further but said the companies would have "synergies with the existing portfolio."
Further ahead, Kooheji said it would be open to investment opportunities in European banks, who are raising capital to bolster their reserves ahead of rigorous tests conducted by the European Central Bank later this year.
Deutsche Bank recently raised 1.75 billion euros from Sheikh Hamad bin Jassim bin Jabor Al-Thani, the former head of Qatar's sovereign wealth fund.
However, Mumtalakat was not studying any such investments currently, Kooheji said.
Mumtalakat aims to sustain profits
