UMW’s revenue higher on automotive segment

By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL

UMW Holdings Bhd registered a net profit of RM128 million for the third quarter ended Sept 30, 2018 (3Q18), compared to a net loss of RM29.4 million in the previous year’s corresponding period, as a result of higher revenue contributed by its automotive segment.

The group said the losses in the same quarter of the previous year were also an effect of its divestment strategy of the unlisted oil and gas (O&G) segment.

UMW stated in its exchange filing last Friday that its revenue climbed 24.7% from RM2.64 billion a year ago to RM3.29 billion in 3Q18.

For the automotive division, UMW said the improved revenue was contributed by the increase in sales during the Goods and Services Tax-free period from June 1 to Aug 31, 2018.

Revenue for the automotive segment rose 24.9% year-onyear to RM2.64 billion from RM2.12 billion in 3Q17, supported by a higher volume during the three-month tax holiday which contributed RM151 million of pretax profit to the company.

UMW said its equipment segment also posted higher sales with increased demand in the construction sector that also led to a 10.8% growth of its pretax profit to RM43.5 million.

The manufacturing and engineering segment’s pretax profit improved from a loss of RM6.7 million to a profit of RM15.5 million, which is attributed to higher revenue as jobs to produce fan cases for Rolls-Royce started to give positive financial results. The fan cases works started to generate revenue from the 4Q17.

“Our 3Q18 results positively reflect the continued execution of our strategic initiatives to restore profitability and momentum, following our exit from the O&G sector,” UMW president and group CEO Badrul Feisal Abdul Rahim (picture) said in a statement last week.

UMW said the reintroduction of the Sales and Services Tax (SST) will likely have an impact on consumer demand in vehicle sales.

As such, the automotive segment is expected to perform satisfactorily based on strong interest received in its newly launched models.

The group said the industrial equipment business is expected to continue performing well in the rental sector, while infrastructure development for coastal and rural roads may have a positive impact on the heavy equipment business.

UMW added that it will continue its efforts to enhance market penetration into other Asean countries for its lubricant business, while the aerospace business is steadily increasing production to meet the expected orders from Rolls-Royce.

In a separate filing, UMW told Bursa Malaysia that its wholly owned subsidiaries have entered into six sale and purchase agreements with Strategic Sonata Sdn Bhd, a wholly owned subsidiary of Mapletree Dextra Pte Ltd.

The agreements entail the proposed disposal of leasehold industrial land comprising 10 lots held under separate documents of title, together with all remaining buildings, structures and plants measuring in total 38.8 acres (15.7ha) for a total cash consideration of RM287.7 million.

The group is expected to realise a RM171 million gain from the proposed disposal and the proceeds will be used for working capital.

UMW said the proposed disposal will enable the group to fully unlock and realise the value of its long-held assets in Shah Alam and facilitate the planned relocation of ongoing business operations in Shah Alam to the proposed UMW High-Value Manufacturing Park in Serendah, Selangor.

The proposed disposal is expected to be completed by the end of 2Q19.