UMW Holdings Berhad announces financial results, revenue reduces by 36%

UMW Holdings Berhad has announced their financial results for the first six months of 2020. The Group’s revenue reduced by 36.6 percent to RM3,648.9 million. The Group was also impacted by share of losses of RM44.1 million from one of its associate companies which involves in leasing and hire purchase financing business due to the present value impact of the loan moratorium and unfavourable mark-to-market valuation of interest rate swaps.

Accordingly, the Group recorded a lower profit before taxation (PBT) of RM4.2 million for the first six months of 2020 compared to a PBT of RM290.9 million a year ago. Consequently, loss attributable to owners of the company for the first half of 2020 was RM34.1 million compared to a profit of RM143.7 million registered for the same period of 2019.

Excluding the substantial loss made by its associate company, the Group reported a profit attributable to owners of the company of RM10.0 million for the first half of 2020.

UMW Holdings Berhad Acting President and Group Chief Executive Officer, Azmin Che Yusoff said, “All three core business segments recorded lower revenue in the first six months of 2020. On a more positive note, sales are gradually improving since the relaxation of the MCO/lockdown, spearheaded by our automotive segment. Both UMW Toyota Motor (UMWT) and Perodua staged a strong upturn in July following disruptions to sales earlier this year. As the economy progressively recovers and demand improves, we are confident of staging a healthy recovery in the second half of the year.”

Sales of vehicle, parts and services were disrupted, leading to a 40.9% decline in the Automotive segment’s revenue for the first half of the year compared with the corresponding period in 2019.

Following the decrease in revenue and a lower share of results from an associated company, the segment reported a PBT of RM12.0 million for the first 6 months of 2020 compared to a PBT of RM275.3 million a year ago.

Encouragingly, automotive sales rebounded strongly in July following the government’s announcement of the sales tax exemption on CKD vehicles (100%) and CBU vehicles (50%) effective from 15 June to 31 December 2020 aimed to spur the growth of the local automotive industry.

UMWT sold 7,509 units in July, its highest for the year, 70.0% more than the 4,417 units registered in June. Meanwhile, the month of July marked Perodua’s highest monthly sales for the year, with registered sales of 23,203 vehicles, a 9.2% increase from the 21,250 units sold in June. The segment is expected to continue to benefit from this tax exemption measure.

The Equipment segment’s revenue of RM522.4 million for the first six months of 2020 was lower than the RM726.5 million recorded in the first half of 2019, mainly due to the economic impact of MCO/lockdowns and Covid-19 to heavy and industrial equipment sub-segments.

In line with the decrease in revenue, the segment’s PBT of RM50.4 million was lower than the RM77.6 million reported in the corresponding period. Despite the challenging outlook for the Heavy Equipment sub-segment due to intense competition in a contracting market, encouraging demand in mining and construction sectors in its overseas operations as well as the introduction of new government initiatives and stimulus packages could help soften the impact.

The Heavy Equipment sub-segment is working with its principal to extend recovery packages to its customers affected by the Covid-19 pandemic while the Industrial Equipment sub-segment will continue to focus on expanding its equipment rental business.

The leasing of industrial equipment provides recurring revenue to the Industrial Equipment sub-segment thus minimising the impact from the Covid-19 pandemic. The Group had also secured distribution rights for collaborative robots (Cobots) from Universal Robots S/A. The new addition to the Group’s product line is expected to contribute positively to the sub-segment’s performance.

The Manufacturing & Engineering (M&E) segment’s revenue of RM431.9 million in the first half of 2020 was 10.3% lower than the RM481.6 million reported in the corresponding period of 2019.

This was due in part to the implementation of MCO which led to lower sales in its Lubricants and Auto-components sub-segments. However, despite the MCO, the Aerospace sub-segment recorded higher revenue from the increased volume of fan cases delivered, which softened the impact from the other two sub-segments.

Subsequently, PBT increased to RM18.5 million from RM15.6 million a year ago. Moving forward, the domestic sales of auto-components is projected to gradually increase following the recent announcement of sales tax exemption as well as lower interest rates, which is expected to spur the local automotive market.

The lubricants sub-segment will continue to leverage on its OEM partners and strengthen its domestic sales and export to ASEAN countries. While the Group expects the Aerospace sub-segment to be impacted negatively following the outbreak of Covid-19, it is partially cushioned by fan case orders that have been received for the rest of the year.

Azmin added, “As evidenced by the contraction in Malaysia’s GDP in 1H2020, the disruptions caused by the Covid-19 outbreak are wide-reaching across business segments and will continue to impact the overall business environment in 2020.

However, we are confident of the resilience of the Malaysian economy and are cautiously optimistic of the improved performance across segments in the second half of the year and in delivering superior value to our shareholders.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Jeffrey Cheah Foundation to launch endowment fund

Malaysia’s largest education-focused social enterprise Jeffrey Cheah Foundation, has announced its plan to launch an endowment fund. The endowment fund targets to...

Ferrari Malaysia introduces the SF90 Stradale

Naza Italia, official importer and distributor of the Ferrari brand in Malaysia, has launched the highly anticipated SF90 Stradale, in conjunction with...

MARii signs MoU with Persona to develop human capital development programme

The Malaysia Automotive, Robotics and IoT Institute (MARii) and Persona Energy Sdn. Bhd. (Persona) has inked a Memorandum of Understanding (MoU) to...

Service sectors record 1,316 approved projects with investments of RM28.6 billion.

From January to June 2020, the nation's services sectors recorded 1,316 approved projects with investments of RM28.6 billion. These...

Manufacturing sector attracts largest portion of approved investments for 1H2020

Malaysia recorded a total of RM64.8 billion worth of investments in the manufacturing, services and primary sectors for the first six months...

Must read

Empowering Malaysians to become informed investors one app at a time

With a goal to build 500 applications that focuses on enabling action, Reactive Labs, co-founded by George and Riza, aims to go...

Bigo Live: A growing sensation in an industry with a big appetite

The live-streaming industry has seen a massive growth in years. From the likes of Vimeo to Facebook Live, the industry has grown...

Embed a proper digital literacy lesson in the school curriculum

By Afifah Suhaimi Amidst the drastic growth of internet users this year – with almost one million additions compared...

How to hire talent in a post Covid-19 world

According to the Global Startup Ecosystem Report from Start-up Genome, 72 percent of startups saw an average of 32 percent fall in...