UMW Holdings’s profit after taxation and minority interests (PATAMI) surged to RM107.2 million for the second quarter ended 30 June 2022 (Q2 2022), compared with the loss after taxation and minority interests (LATAMI) of RM3.6 million registered in the corresponding quarter ended 30 June 2021 (corresponding quarter).
This is attributed by the improved contribution from all three core business segments, Group revenue in Q2 2022 rose by 52.6% to RM3,730.8 million, a strong recovery to the pre-Covid-19 levels. The Group’s improved performance is mainly attributed to the economic recovery under the National Recovery Plan (NRP) as opposed to the Full Movement Control Order (FMCO) implemented from 1 June 2021 to 15 August 2021 as well as the transition into the endemic phase of Covid-19.
The Automotive segment’s revenue for Q2 2022 grew by 57.3% to RM3,117.4 million compared with the corresponding quarter, supported by the higher number of vehicles sold which was driven by the sales tax exemption as well as the introduction of new models. In line with the higher revenue and share of profit from an associated company, the segment’s profit before taxation and zakat (PBTZ) increased almost six-fold to RM202.9 million.
Supported by the strong sales in the first half of the year and the high backlog of orders, the Malaysian Automotive Association (MAA) has recently revised upwards its Total Industry Volume (TIV) forecast for 2022 to 630,000 units from 600,000 units previously. In addition, the government has further extended the sales tax exemption for outstanding bookings made by 30 June 2022 as long as these vehicles are registered by 31 March 2023. As the ongoing global semiconductor chip shortage continues to ease together with improvements made in the supply chain, the Group is confident of achieving its sales targets for the year.
The Equipment segment’s revenue increased by 22.2% to RM366.6 million in Q2 2022 compared with RM299.9 million in the corresponding quarter, mainly due to the growing demand for the segment’s products and services in the local and overseas markets. In tandem with the higher revenue, the segment’s PBTZ of RM35.4 million was 11.4% higher than the RM31.8 million reported in the corresponding quarter.
The demand for heavy equipment remains strong in all the markets, except for Myanmar due to the ongoing political uncertainties. The strong commodity prices and the increase in construction activities are expected to contribute positively to the sub-segment. The Industrial Equipment sub-segment will continue to strengthen its automation and forklift refurbishment businesses for future growth. The improving demand in the manufacturing, food and beverage, and logistics sectors is expected to increase demand for the Industrial Equipment sub-segment’s products and services.
The segment’s revenue increased by 41.6% to RM226.4 million compared with RM159.9 million in the corresponding quarter due to the higher contribution from all sub-segments. In tandem with the higher revenue, the segment reported a higher PBTZ of RM13.1 million for 2Q 2022. The segment is expected to benefit from the robust original equipment (OE) and replacement equipment (RE) markets due to the higher demand for vehicles in the second half of 2022.
The Aerospace sub-segment will continue to explore opportunities to improve its plant utilisation and diversify its manufacturing capabilities in line with its products and customer diversification strategy. The steady growth in the air passenger and cargo traffic in 2022, provides an important impetus to the growth in the orders for new widebody planes in the future. Together with the clearing of the backlog orders for planes by the aircraft manufacturers, the future for the aeroplane fan cases business is improving.
“The Group registered improved results in the second quarter of 2022 following transition to the endemic phase of Covid-19. However, the Group remains cautious in view of the challenges arising from the environment of rising interest rates and high inflation. Furthermore, the prolonged military conflict in Ukraine and rising geo-political tensions have added to the increased uncertainty in the general business environment and confidence which in turn continues to strengthen the US dollar against other currencies including Ringgit Malaysia,” UMW Holdings Berhad President and Group CEO, Dato’ Ahmad Fuaad Kenali said.
“Against this backdrop, the Group will continue to improve its resilience through continued focus on cost optimisation and operational efficiency as well as engaging closely with its principals, suppliers and stakeholders to mitigate the impact to the Group. Overall, the Group expects its performance for the financial year 2022 to be better than the previous year,” he stressed.
