UMW’s 2Q19 net profit drops 54% to RM57m

by SULHI KHALID/ pic by MUHD AMIN NAHARUL

UMW Holdings Bhd’s net profit declined 54% year-on-year (YoY) to RM57.19 million in the second quarter ended June 30, 2019 (2Q19), due to lower profit recorded from its continuing operations.

Revenue rose 1.7% YoY to RM2.97 billion in 2Q19, underpinned by higher sales in the automotive and manufacturing and engineering segments, the group said in an exchange filing yesterday.

Higher share of profit from an associated company following higher vehicle sales boosted its automotive division’s revenue to RM2.39 billion from RM2.38 billion previously.

Revenue at its equipment segment fell to RM343.6 million in the quarter from RM365.9 million last year due to lower demand for heavy equipment products in the current quarter, the group said.

Higher volumes of fan cases delivered by its aerospace business pushed revenue in the manufacturing and engineering segment to RM244.5 million in the period from RM178.3 million the year prior.

Moving forward, UMW intends to strengthen its three core businesses.

Notwithstanding uncertainties in the global economy due to the US-China trade tensions, as well as exchange-rate movements, the group will continue its cost optimisation initiatives.

The automotive business remains competitive with wider customer choice and prudent spending by both consumers and businesses.

New models with competitive prices and low lending costs will help ensure sales remain stable in the second half, it stated.

For the equipment sector, expansion of the overseas market is expected to contribute to higher sales, while productivity improvements and cost management initiatives will help cushion the impact from rising market competition.

The government’s move to revive several mega infrastructure projects has also reignited interest in the construction industry, leading to an anticipated increase in demand for the group’s equipment business.

For its manufacturing and engineering segment, the general outlook remains positive with higher vehicle sales and parts replacements in the second half of 2019.

UMW’s auto segment consists of its joint venture with Toyota, as well as a stake in Perusahaan Otomobil Kedua Sdn Bhd, or better known as Perodua, to assemble, market and distribute passenger and commercial vehicles.

It distributes heavy equipment through its equipment businesses and supplies components for original equipment manufacturers and replacement automotive markets via its manufacturing and engineering division.

Shares of UMW closed 0.67% or three sen higher at RM4.50 yesterday, giving the firm a market capitalisation of RM5.26 billion.