DRB-Hicom’s 4Q profits soar


DRB-HICOM Bhd expects the automotive sector to remain a key growth driver in 2021 as the group posted a net profit of RM985.99 million and revenue of RM4.85 billion for the fourth quarter (4Q) ended Dec 31, 2020.

The group noted its exceptional quarter performance was attributed to recognition of exceptional gains of RM945.95 million on disposals of property assets, investments and impairment loss of goodwill/intangible assets in certain subsidiary companies.

DRB-Hicom expects the extension of sales tax holiday for passenger cars until June 30 this year will support market demand.

The impact of the tax exemptions was significant with revenue from the automotive sector hitting RM8 billion for the financial year 2020 (FY20), with the 4Q being its best quarter with RM2.6 billion worth of sales, up 3% year-on-year (YoY), the company noted in a release yesterday.

The company’s expected introduction of facelifted variants and aggressive promotional campaigns by various marques under the group will boost sales in the current financial year.

Proton Holdings Bhd’s market share grew to 20.5% in 2020 (2019: 16.6%) helped by the launch of the Proton X50 in October and Proton X70 continued to dominate the C-segment and B-segment SUV markets while the Saga brand remained a popular A-segment sedan in the country.

The growth came despite total industry volume in 2020 falling 12.4% YoY to 529,434 units due to the impact of the Movement Control Orders in the year.

Malaysian Automotive Association forecast a moderate recovery for sales over the next four years, with an 8% growth in 2021, and about 3% average growth annually until 2025.

More than 95% of this growth is predicted to be from passenger vehicles.

DRB-Hicom’s full-year revenue was RM13.15 billion, while net profit amounted to RM554 million or 28.66 sen earnings per share.

DRB-Hicom’s revenue from its services sector came in at RM3.5 billion in FY20, mainly boosted by the performance of postal and logistics subsidiaries, and banking operations.

Its property segment’s revenue stood at RM1.3 billion, boosted by the completion of the disposals of property assets and investments by the group.

“The disposal — first announced in 2018 as part of the restructuring of DRB-Hicom’s property businesses — saw the group recognise a gain of RM862.6 million,” DRB-Hicom media release yesterday stated.

Among the disposals were the group’s residential landbank, with the property sector now focusing more on industrial properties, for its extensive landbank in Kedah, Perak, Melaka and Johor.

The move also marks DRB-Hicom’s exit from the hospitality industry.

DRB-Hicom’s postal business under Pos Malaysia Bhd will continue its transformation initiatives in 2021, as it targets to further improve efficiency, manage costs and capitalise on growth opportunities.

The e-commerce sector is booming, as more and more Malaysians embrace home shopping as a safety net in these pandemic times.

The national postal company will thus continue to invest towards strengthening its digital infrastructure which will enable it to serve its customers better and more efficiently.

DRB-Hicom’s businesses in the defence, aerospace, banking, services and property segments will continue to target for operating efficiencies towards optimising their costs while improving productivity.

Despite a strong FY20, the conglomerate expects 2021 to remain challenging despite the rollout of Covid-19 vaccines by the government yesterday.

“In this difficult economic landscape, the group expects another challenging financial year ending Dec 31, 2021, as the global developments surrounding the containment of Covid-19 remain fluid.

“Hence, DRB-Hicom will continue to adopt or where necessary, design new prudent cost management approaches, while focusing on strengthening its respective core business segments to ensure business continuity,” it said.

DRB-Hicom shares closed four sen or 2.34% lower at RM1.67 yesterday, valuing the group at RM3.23 billion.

Read our previous report here

DRB-Hicom’s auto sales will remain solid