UMW Holdings Berhad (“Group”) registered profit after tax and minority interests (“PATAMI”) of RM101.3 million in the third quarter ended 30 September 2020. Group revenue of RM2,663.3 million was higher than the RM1,529.7 million reported in the preceding quarter ended 30 June 2020 (“preceding quarter”) mainly due to improved performance from all its main segments spurred by the sales tax exemption for the automotive industry.
In line with the increase in revenue, the Group reported a profit before taxation (“PBT”) of RM159.5 million in the current quarter compared with a loss before tax (“LBT”) of RM58.8 million in the preceding quarter.
UMW Holdings Berhad President and Group CEO, Dato’ Ahmad Fuaad Kenali said, “With the easing of MCO/lockdowns, the Group is gradually registering improved financial results. Automotive sales has increased due to 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 targeted at spurring the growth of the local automotive market. Our continuing cost optimisation initiatives across the Group have led to sustainable improvement in our bottom line.”
With the higher number of vehicles sold, the Automotive segment’s revenue for the third quarter of 2020 increased by 93.1% to RM2,127.5 million compared with the preceding quarter, while PBT surged to RM131.6 million compared with LBT of RM41.7 million. Automotive sales rebounded strongly in the third quarter due to the sales tax exemption and the segment is expected to continue to benefit from this measure. As a result, UMW Toyota Motor has revised its sales target upwards to 53,000 units from its previous target of 45,000 units. Meanwhile, Perodua, which broke its monthly sales record in the month of October with total registration of 26,852 units, targets to sell 210,000 units in 2020.
The Equipment segment’s revenue of RM297.0 million for the third quarter of 2020 was 27.3% higher than the RM233.2 million recorded in the preceding quarter, while PBT improved by 38.1% to RM34.0 million as demand for the segment’s products and services improved following the relaxation of the lockdown. The outlook for the Heavy Equipment sub-segment will continue to remain challenging due to the uncertainties surrounding global trade, regulatory, political and commodity flux as well as the evolving COVID-19 developments. Nonetheless, encouraging demand in the mining and construction sectors in its overseas operations could help cushion the impact. The Industrial Equipment sub-segment is expected to continue to recover as most business sectors have resumed operations. The introduction of recovery packages to customers have been well received and the market is expected to remain positive with the continuation of these programs. The sub-segment will continue to focus on growth sectors, especially in the essential services category, such as logistics, food & beverages as well as small medium industries.
As a result of improved performance in the Auto component and Lubricant sub-segments, the Manufacturing & Engineering segment’s revenue of RM242.3 million in the third quarter of 2020 was 32.1% higher than the RM183.3 million reported in the preceding quarter, while PBT rose to RM20.3 million from RM8.0 million. Moving forward, the domestic sales of auto components is expected to further improve following the sales tax “holiday” period given to locally assembled cars until end of the year 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 and overseas sales. Notwithstanding the impact of the COVID-19 pandemic to the aviation sector, the Aerospace sub-segment made its maiden delivery of Trent 7000 fan case in October 2020, aligning its strategies on products and end customer diversification.
Dato’ Fuaad added, “We will continue to focus on strengthening our core business segments and cost optimisation initiatives to improve our business performance and productivity. Amidst the challenging business environment, we will strive to maintain our performance and continue to deliver value to our customers and shareholders.”