DRB-Hicom returns to profitability on automotive, services income

By MARK RAO / Pic By TMR File

DRB-Hicom Bhd returned to the black for its fourth quarter ended March 31, 2019 (4Q19), as key business segments, except postal services, turned in improved performances.

The company posted a RM127.86 million net profit for the quarter against a loss of RM59.4 million in 4Q18 as revenue grew 16.4% to RM3.47 billion over the same period.

This brought total revenue for the 2019 fiscal year (FY19) higher at RM12.48 billion — up 1.9% year-onyear (YoY) — despite net profit fell 71.4% to RM122.87 million on earlier losses and absence of a RM1.1 billion research and development grant recognised on its books.

The performance was underpinned by the company’s automotive business, represented by its 50.1%-owned Proton Holdings Bhd, which made 59% of total group revenue for FY19.

The company said the automotive segment was bolstered by higher sales of Proton-model cars following the launch of its maiden SUV, the X70, in December last year.

“The SUV is now the undisputed best-selling SUV in Malaysia for 2019 with 30,000 orders received and more than 14,000 have been delivered.

“With the updated models of the Iriz, Persona and Exora already in the market, Proton should see improved sales in 2019,” the company said in a statement yesterday.

The services business, which is the second-largest revenue contributor at 36.7%, improved on the higher income recognised from the banking and waste management sectors.

This was offset by the performance of Pos Malaysia Bhd, the national courier operating under DRB-Hicom, which saw its net profit fall 86.1% YoY on higher sales costs and operating expenses, as well as the continued decline in traditional mail volume.

Meanwhile, the property division turned in weaker revenue at RM540.92 million, down 37.3% YoY on lower contributions from ongoing construction projects.

DRB-Hicom did not announce a dividend for FY19 despite declaring a three sen dividend for the previous fiscal year.

For its leading automotive business, the company said it will continue to grow the business via new model launches following the success of the Proton X70.

The model was a joint collaboration between Chinese automaker Zhejiang Geely Holding Group Co Ltd, which holds the remainder interest in Proton.

Going forward, DRB-Hicom said auto sales will be supported by the impending launch of the updated Proton Saga model, as well as the locally-assembled version of the X70.

Ongoing expansion of Proton 3S/4S centres nationwide are also being undertaken to improve customer service in the country, it added.

For Pos Malaysia, DRB-Hicom said the courier is engaging with regulators to seek a tariff revision for regulated services as competition and a higher area of coverage are putting immense pressure on operating costs.

“The group is hopeful to yield a positive outcome with the regulators. To improve operational efficiencies and cost optimisation, investments are being undertaken towards automation of the operations, as well as using digital technology,” it said.

Meanwhile, the group will continue to grow its aerospace, defence, banking, concession and property businesses, as well as optimise on cost.