UMW’s 4Q earnings helped by land sale

The group also saw stronger contribution from its continuing operations, as well as the manufacturing and engineering segment


UMW Holdings Bhd’s earnings for the fourth quarter ended Dec 31, 2019 (4Q19), were boosted by disposal of RM188 million worth of land plots which took its net earnings for the period to RM200.46 million from RM17.93 million net profit in 4Q18.

The group also saw stronger contribution from its continuing operations, as well as the manufacturing and engineering segment.

The discontinued oil and gas operations helped the segment report a lower loss of RM13.8 million compared to the RM44.9 million loss incurred in the corresponding quarter, UMW said in an exchange filing yesterday.

Revenue for the quarter rose 16.28% year-on-year (YoY) to RM3.11 billion mainly due to higher sales in the automotive, and manufacturing and engineering businesses.

Revenue from the automotive segment rose 19.9% YoY to RM2.45 billion on higher number of vehicles sold in the quarter.

Pretax profit of RM114.9 million was lower than the RM130.3 million in the corresponding quarter due to a lower share of profit from an associate in the current quarter, it said.

Its equipment segment made a revenue of RM328 million which was lower than the RM397.2 million it made in the corresponding quarter.

UMW said both heavy and industrial equipment businesses reported lower revenue following sluggish demand in the quarter.

“Pretax profit of RM27.3 million was lower than the RM33.9 million profit reported in the corresponding quarter, in line with the lower revenue in the current quarter,” it said.

UMW’s manufacturing and engineering segment made a revenue of RM328.5 million in the period and was higher than the RM242.8 million reported in the corresponding quarter last year.

This was mainly due to a higher volume of fan cases delivered by its aerospace subsegment and increased demand for some of its other products.

“Profit before tax was higher than the RM9.4 million in the corresponding quarter following the increase in revenue and benefits gained from cost optimisation efforts in the current quarter,” the UMW filing said.

For the full year, UMW’s net profit rose 31.9% YoY to RM454.44 million, while revenue was up 3.85% YoY to RM11.74 billion.

UMW has proposed a final single-tier dividend of two sen per share, payable on March 31, 2020, bringing its full-year dividend to six sen per share.

The group will continue to focus on strengthening its core business segments and strategic cost optimisation initiatives to improve its business performance and operational productivity.

“The group will continue to persevere to maintain its performance in 2020,” it said.

For its automotive segment, UMW said vehicle sales are expected to remain moderate, following the expected modest growth in the industry, as well as continued soft consumer sentiment, stiff competition, and the challenging foreign-exchange environment.

The impact is expected to be cushioned by the introduction of new models by the group in 2020.

UMW expects the heavy equipment business outlook to remain subdued due to sluggish demand in the various sectors it operates in.

“The revival of major infrastructure projects in Malaysia, as well as the higher demand in Singapore and Papua New Guinea, is expected to contain the downward pressure on the business,” it said.

The industrial equipment business will continue to focus on the growth sector, as well as better prospects expected in Vietnam, supported by leasing and other value-added services.

UMW added that the aerospace business had started to contribute positively in 2019 and is expected to further increase its plant utilisation in 2020.

“The demand for auto components and lubricants products is expected to remain stable over the near term,” it said.

UMW’s shares closed 3.29% or 11 sen lower at RM3.23 yesterday, valuing the company at RM3.77 billion.