UMW Holdings Berhad\u2019s Automotive and Equipment segments remained profitable in the second quarter of 2017 despite challenging operating conditions due to intense competition, lower margins and weaker consumer demand. \u00a0<\/p>\n
The Manufacturing & Engineering segment continued to perform reasonably well but was affected by pre-operating expenses incurred by the aerospace business. \u00a0<\/p>\n
Meanwhile, the Group\u2019s listed Oil & Gas segment recorded losses for the quarter but moving forward this will no longer impact the Group following the successful completion of the demerger. \u00a0A one\u2013off loss arising from the demerger exercise was also included in the second quarter\u2019s results.<\/p>\n
President and Group Chief Executive Officer of UMW Holdings Bhd Badrul Feisal bin Abdul Rahim, said: \u201cAs per our strategy, we have successfully completed the demerger within the said timeframe and the exit will provide the platform for the Group to emerge as a stronger, more competitive industrial conglomerate with increased capacity for expansion. Despite the challenging operating environment, the Group continue to perform reasonably well in our core business segments.\u201d<\/p>\n
\u201cHowever, the losses from the Oil & Gas segment continue to impact the Group\u2019s performance. Nonetheless, the demerger has resulted in reduced exposure to debt and a strengthened balance sheet, thus improving our financial position to enable new and accretive investments which will spur the growth of our core business segments moving forward.\u201d<\/p>\n
Overall, the Group registered revenue of RM2,925.6 million for the second quarter of 2017, an increase of RM78.8 million or 2.8% higher than the corresponding quarter of 2016. \u00a0The improved revenue was primarily contributed by the Automotive segment. \u00a0<\/p>\n
However, the Group posted a loss before taxation of RM189.5 million for the quarter as opposed to a profit before taxation of RM44.8 million in the same quarter of 2016. \u00a0This was mainly attributable to the losses in both the listed and unlisted Oil & Gas segments. \u00a0<\/p>\n
Also included in the results was a one-time loss on demerger of UMW Oil & Gas Corporation Berhad (UMW-OG) of RM126.9 million arising from the difference between the fair value\/market value of UMW-OG dated 13 June 2017 and share of net assets of UMW-OG.<\/p>\n
The Automotive segment registered improved revenue of RM2,260.3 million for the second quarter of 2017, an increase of RM83.2 million or 3.8% compared to the corresponding quarter in 2016. \u00a0Higher revenue was attributable to the surge in demand for Toyota Innova and Toyota Fortuner. \u00a0However, profit before taxation (PBT) was lower at RM99.0 million primarily due to the strengthening of the US Dollar, which increases the cost of imports, hence shrinking margins.\u00a0<\/p>\n
The market share for Toyota including Lexus for 1H17 strengthened to 12.0% compared to 10.1% in 1H16 and sales could be further supported by the launch of new models later this year.\u00a0<\/p>\n
Revenue of the Equipment segment in the second quarter of 2017 stabilised at RM351.4 million. \u00a0However, PBT for the quarter was at RM32.2 million, a drop of RM11.2 million compared with the same quarter of 2016 of RM43.3 million. \u00a0The earnings declined amid shrinking margins and a highly competitive operating environment. \u00a0<\/p>\n
While there is a slowdown in the heavy equipment segment, the industrial equipment segment continues to perform well, particularly the leasing business. \u00a0Consequently, Toyota forklift commands more than 50% market share in Malaysia and Singapore.\u00a0<\/p>\n
The Manufacturing & Engineering segment recorded a revenue of RM153.9 million in the second quarter of 2017, marginally lower than the RM157.0 million reported in the same quarter of 2016. \u00a0The lubricant business was affected by intense competition and registered lower revenue. \u00a0<\/p>\n
The broader segment registered a loss before taxation of RM9.6 million, as opposed to a PBT of RM10.9 million in the same quarter of 2016. \u00a0The profitability was negatively affected by the pre-operating expenses incurred by the aerospace business. \u00a0<\/p>\n
Moving forward, the shock absorber business (KYB) remains sustainable in view of its high market share in the OEM and strong position in the REM segments especially exports as KYB-UMW exports products to 38 countries.<\/p>\n
The Unlisted Oil & Gas segment registered lower revenue of RM31.7 million in the second quarter compared to RM42.3 million in the corresponding quarter of 2016, mainly due to the continued low industry demand. \u00a0<\/p>\n
The loss before taxation also widened to RM70.6 million in the second quarter, attributable to lower revenue and expenses incurred on cessation of drilling operations in Oman.<\/p>\n
Badrul Feisal added: \u201cThe Group\u2019s overall performance remains challenging for the rest of the year. \u00a0We are committed to exit the unlisted oil & gas segment and hopefully we should be able to achieve considerable milestones by the end of this year.\u201d<\/p>\n
\u201cTill then, the Group\u2019s overall performance will continue to be impacted by headwinds from the oil & gas sector until full completion of the exit plan. On a more positive note, UMW Toyota Motor is also on track to achieve its full-year sales target of 70,000 units for 2017. \u00a0Sustained traction of the leasing business will continue to boost the industrial equipment segment and underpin the performance of the broader Equipment division. In addition, the fan case project is progressing as per schedule and delivery is expected to commence in the last quarter of this year. \u00a0Meanwhile, we will continue to improve operational methods to achieve efficiency equilibrium and extract better Group synergies.\u201d<\/p>\n
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UMW Holdings Berhad\u2019s Automotive and Equipment segments remained profitable in the second quarter of 2017 despite challenging operating conditions due to intense competition, lower margins and weaker consumer demand. \u00a0 The Manufacturing & Engineering segment continued to perform reasonably well but was affected by pre-operating expenses incurred by the aerospace business. \u00a0 Meanwhile, the Group\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-991","post","type-post","status-publish","format-standard","hentry","category-corporate"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=991"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/991\/revisions"}],"predecessor-version":[{"id":6197,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/991\/revisions\/6197"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}