DRB-Hicom narrows losses in 1Q18


A STRONGER performance achieved by automotive unit Proton Holdings Bhd and improved performance from its other businesses helped drive DRB-Hicom Bhd’s top line numbers and reduce net loss at the start of its fiscal year.

For its first-quarter ended June 30, 2017 (1Q18), the conglomerate registered a net loss of RM101.35 million, or 27.2%, year-on-year (YoY) lower than 1Q17 — mainly due to reduced losses posted by Proton.

The group also benefitted from higher contribution from its services business, achieved via the inclusion of Pos Malaysia Bhd’s profits, and stronger results from subsidiaries helped reduced losses for the period.

The group’s profits were offset by lower share of results from joint ventures and associated companies.

Revenue rose 33.6% YoY to RM3.34 billion for the period on higher sales achieved from both Proton and Pos Malaysia.

The automotive sector — the key contributor to the group — posted RM2.12 billion in turnover for 1Q18, representing a 19.8% increase from the RM1.77 billion in 1Q17.

DRB-Hicom noted Proton and other carmakers in the segment were bolstered by the improved sales achieved during the Hari Raya Aidilfitri festive period.

The group’s property, assets and construction business also posted a revenue of RM131.5 million for the period.

The services business of the group was driven by Pos Malaysia’s courier and logistics business, and higher sales achieved by banking subsidiary Bank Muamalat Malaysia Bhd, its exchange filing last Friday noted.

Going forward, DRB-Hicom believes the sale of a 49.9% stake in Proton to Chinese automaker Zhejiang Geely Holding Group Co Ltd for RM460.3 million will be key in turning around the fortunes of the local automaker.

“The deal with Geely will put Proton in a stronger position, as the Chinese group will bring along its technology and expertise to Malaysia’s first carmaker in an effort to reclaim the mantle in the domestic car market,” DRB-Hicom said in its statement.

“Reviews by both analysts and journalists about the deal and Geely have been positive, and we remain confident that the turnaround of Proton will be achieved in due course,” it added.

The group is working diligently to obtain the necessary regulatory approvals for the sale and intends to secure shareholders’ approval at its upcoming EGM on Aug 30.

Growing e-commerce demand is expected to help Pos Malaysia strengthen its dominance in the courier market, while concession-based construction projects within the property sector will be the key driver for the group’s third core business.

DRB-Hicom did not declare a dividend for 1Q18. Its share price closed at RM1.59 last Friday, down by two sen for the day, giving it a market capitalisation of RM30.7 billion.