UMW Group Reverses Loses Recording RM76.2 Million In Profits

After a rocky 2020, UMW Holdings Berhad has managed to sort out its manufacturing and vehicle delivery throughout the lockdown period this year. The group has turned losses incurred in the first half of last year into a profit half due to its higher contribution from the automotive and equipment segments.

Revenue for the 2nd quarter came it at RM2.4 billion an increase of 59.8% compared with the corresponding quarter ended 30 June 2020. This led to a registered profit before taxation of RM32.6 million compared with loss before taxation of RM58.8 million in the corresponding quarter which was impacted by the first Movement Control Order. 

For the first half of 2021, the group recorded profit attributable to shareholders of RM76.2 million at the back of RM5.4 billion revenue, compared with a loss of RM34.1 million at the back of RM3.6 billion revenue for 1H 2020.

Automotive was the key sector contributing for the better half, vehicle sales increased with introduction of new models and the government sales tax exemption encouraged buyers to purchase. The automotive segment’s revenue surged by 79.8% to RM2.0 billion this coupled with improved contribution from an associated company led to PBT of RM34.6 million in 2Q 2021 against loss before taxation of RM41.7 million in 2Q 2020. 

On the industry level, the Malaysian Automotive Association, due to the prolonged lockdown, has revised downwards its forecast for the 2021 Total Industry Volume (“TIV”) to 500,000 units from 570,000 units announced early this year. UMW Holdings will be wary of the conditions and take the necessary measures to increase production and delivery of vehicles to work towards achieving its annual sales targets. Demand for Toyota and other models continue to see bright spots.

The other area that saw demand was the equipment segment, which had its revenue increase by 28.6% to RM299.9 million in 2Q 2021, while profits grew by 29.1% to RM31.8 million.  However, the Covid-19 pandemic continues to impact the performance of the equipment segment.  For the Heavy Equipment sub-segment, the political situation in Myanmar is also expected to adversely impact its performance. Nonetheless, the higher gold prices and positive outlook for the construction sector may soften the impact on the sub-segment. 

Areas mostly impacted were Manufacturing & Engineering and the Aerospace sub-segment both continue to be plagued by the ongoing global sentiment and travel restriction.

On the overall performance, Group CEO Dato’ Ahmad Fuaad Kenali is congnisant of the markets and admits that things will remain challenging for the second half of the year due to the Covid-19 pandemic. However, he is confident the group will constantly assess its strategies and initiatives, and continue to drive transformation.

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