Driven by the strong automotive sales, UMW Holdings Berhad (“Group”) achieved profit after tax and minority interests (“PATAMI”) of RM97.3 million for the first quarter ended 31 March 2021, more than double the RM44.3 million recorded in the first quarter of 2020. Group revenue surged by 39.4% to RM2,954.2 million compared with the corresponding quarter ended 31 March 2020 (“corresponding quarter”) mainly due to higher contribution from the Automotive and Equipment segments.
UMW Holdings Berhad President and Group CEO, Dato’ Ahmad Fuaad Kenali said, “We are encouraged by the Group’s results in the first quarter of 2021 despite the challenging business environment. The Automotive segment’s performance improved significantly as it benefitted from the sales tax exemption as well as introduction of new models. With the improving economic activities, the Equipment segment also recorded a higher revenue. Prudent cost management has also contributed to the improved financial result. The Group will continue to implement cost optimisation initiatives and optimise our business processes further to generate better returns to our shareholders.”
Driven by the higher number of vehicles sold during the first quarter of the year, the Automotive segment revenue surged by 51.1% to RM2,396.0 million compared with the corresponding quarter. Furthermore, improved contribution from an associated company resulted in the segment’s profit before taxation (“PBT”) to more than double to RM145.5 million. Apart from the extension of the sales tax exemption, which will end on 30 June 2021, introduction of new models as well as the low interest rate environment are anticipated to propel the sales momentum for the year. In order to mitigate the shortage of semiconductor chips, the Group is exploring various avenues and working closely with its principals and suppliers for alternative sources of semiconductor chips.
The Equipment segment revenue increased by 15.0% to RM332.5 million in the first quarter of 2021 mainly due to higher demand for its products and services in both its local and overseas operations. The performance of the Industrial Equipment sub-segment is expected to be sustainable as it focuses on growth sectors as well as extending various recovery packages to its customers to remain competitive in the emerging post-pandemic recovery. With rising e-commerce adoption spurred by the COVID-19 pandemic, the sub-segment could benefit from the increasing demand for warehouse equipment. The anticipated recovery in the construction sector, anchored by the implementation of large-scale infrastructure projects is expected to support the Heavy Equipment sub-segment’s performance.
The Manufacturing & Engineering segment’s revenue and PBT declined in the first quarter of 2021 mainly due to the lower delivery of fan cases by the Aerospace sub-segment. The Aerospace sub-segment is continuously exploring opportunities to improve its plant utilisation in line with its products and end-customer diversification strategy to mitigate the impact of the COVID-19 pandemic on aviation sector.
The aviation sector is on the recovery path following the rollout of vaccination programme for COVID-19. This in turn will hasten the full recovery of the aerospace industry, to begin in 2022 as projected by the leading industry players. On the other hand, the prospect for Auto Components sub-segment remains positive for 2021 supported by the extension of sales tax exemption until 30 June 2021, coupled with improved automotive total industry volume (“TIV”) and the government’s stimulus packages. The Lubricants sub-segment will continue to leverage on its Original Equipment Manufacturer (“OEM”) and Replacement Equipment Manufacturer (“REM”) markets to strengthen its domestic and overseas sales.
Dato’ Fuaad added, “We are cautiously optimistic of our prospects for the year, underpinned by Malaysia’s projected GDP growth in 2021 of between 6.0% and 7.5% and the continuing support from the government.”
–Bernama–
