For the first quarter ended March 31, UMW Holdings Berhad registered a lower revenue of RM2,119.2 million as disruptions caused by the Covid-19 pandemic led to lower sales in the Automotive and Equipment businesses.
On a more positive note, the Manufacturing & Engineering (M&E) segment achieved a revenue increase of 4.8 percent and a strong growth in profit before taxation (PBT). Consequently, the Group’s PBT reduced to RM63.0 million while profit attributable to the owners of the company decreased to RM44.3 million.
UMW Holdings Berhad Acting President & Group CEO, Azmin bin Che Yusoff said, “We will continue to focus on strengthening our core business segments and strategic cost optimisation initiatives to improve our business performance and operational productivity. Amidst the unprecedented challenging business environment, the Group will strive to maintain its performance in 2020.”
Following the Automotive segment’s 26.7 percent revenue decline to RM1,585.9 million and a lower share of profit from an associated company, the segment’s PBT declined to RM53.7 million from RM124.2 million recorded in the first quarter of 2019.
Moving forward, despite the subdued market environment, the Group is cautiously optimistic of improving demand from customers post-Movement Control Order. Furthermore, the Group plans to launch a pipeline of exciting new models to soften the impact of market slowdown.
The segment should also benefit from the recent announcement of 100 percent sales tax exemption on CKD vehicles and 50 percent exemption for CBU vehicles effective from June 15 to Dec 31.
The Equipment segment’s revenue receded by 24.5 percent while PBT was lower at RM25.8 million due to sluggish demand for both Heavy Equipment and Industrial Equipment businesses arising from challenging market conditions.
Despite the challenging outlook for the Heavy Equipment sub-segment, encouraging demand in mining and construction sectors in its overseas operations could help to soften the impact. The Industrial Equipment sub-segment is extending recovery packages to its customers affected by the Covid-19 pandemic and will continue to focus on expanding its equipment rental business.
The M&E segment recorded a 4.8 percent increase in revenue as its Aerospace sub-segment delivered higher number of fan cases. With the higher revenue and improved contribution from the Lubricants sub-segment, PBT of RM10.5 million was higher than the RM2.3 million recorded in the corresponding quarter of last year.
Going forward, the segment foresees sustainable demand for auto components in the after-sales and overseas markets, while the Lubricants sub-segment will continue to leverage on its OEM partners and strengthen its domestic sales and export to ASEAN countries. While it is expecting a downward impact to the Aerospace sub-segment following the Covid-19 pandemic, the Group is partially sheltered by firm fan case orders received for the rest of the year.
Azmin bin Che Yusoff added, “Although the business environment will continue to be challenging in 2020 due to exogenous factors, with policies set in place by the government to support performance across sectors, we are confident of delivering value for our shareholders.”