DRB-Hicom earnings supported by higher automotive sales

by FARA AISYAH / pic by MUHD AMIN NAHARUL

DRB-HICOM Bhd expects automotive sales to remain strong in the fourth quarter of 2020 (4Q20), driven by demand ahead of the end of the sales tax holiday on Dec 31, 2020, and new launches.

Strong car sales saw DRB-Hicom posted RM47.5 million in earnings or earnings per share of 2.46 sen for the 3Q ended Sept 30, 2020, in addition to the better financial results from its other operating subsidiaries and higher share of results from joint-ventures and associated companies in the quarter.

Revenue for the quarter was RM3.56 billion as contribution from all businesses improved due to the recovery in economic activities and efforts undertaken by the group’s businesses.

DRB-Hicom’s automotive segment’s revenue was mainly derived from sales of vehicles and components by Proton Holdings Bhd, automotive distribution companies and from manufacturing and engineering, and aerospace companies.

The sales performance was significantly affected in the 2Q as the automotive business operations were temporarily ceased from mid-March to early May during the Movement Control Order (MCO) period.

The conglomerate noted that Malaysian Automotive Association data showed a total of 166,796 vehicles were sold in the 3Q, a 145% growth in total industry volume from 68,147 units sold in the 2Q.

Last month, Proton launched its second SUV, the X50, which has received exceptional response with more than 20,000 bookings secured.

The larger X70, the Saga and the Persona sedans have also remained popular with Malaysian buyers.

“These models should enable Proton to sustain its upward momentum and maintain its growing market share that has risen to 22% in the nine months to September 2020,” DRB-Hicom said in a release yesterday.

Other makes under DRB-Hicom such as Volkswagen, launched the D-segment Arteon and the seven-seater SUV Tiguan Allspace, while Honda Malaysia and Mitsubishi Motors Malaysia launched the all-new B-segment City and the seven-seater mini-MPV Xpander respectively.

“These new models should continue to boost the group’s automotive sector,” DRB-Hicom added.

Revenue for the service segment of the group in the 3Q was mainly from postal and logistics, and banking businesses, which were also impacted by the MCO even though they are classified as essential services.

The postal and logistic businesses continue to thrive in the new normal, with digitalisation becoming integral for the business as the ongoing pandemic creates a robust e-commerce demand which will bode well for the courier segment.

The group’s other businesses in aerospace, defence, education, concession and property will keep focusing on strengthening their core business segments, while improving its business performance and operational productivity in this challenging time through disciplined and prudent cost management.

DRB-Hicom’s properties segment revenue was mainly from construction-related projects and was impacted by the temporary closure of construction sites due to the imposition of the MCO.

For the cumulative nine-month period, the group posted a RM431.86 million net loss or 22 sen loss per share on the back of RM8.31 billion in revenue.