UMW narrows net loss on higher auto, equipment sales

by NUR HAZIQAH A MALEK / pic by MUHD AMIN NAHARUL

UMW Holdings Bhd narrowed its net loss to RM21.1 million for its second quarter ended June 30, 2021 (2Q21), from a net loss of RM78.44 million in 2Q20, attributable to higher sales of automotive and equipment.

Revenue increased 59.8% year-on-year (YoY) to RM2.45 billion from RM1.53 billion in 2Q20.

During the quarter, its automotive segments posted 79.8% higher revenue YoY of RM1.98 billion on higher volume of vehicles sold, boosted by the sales tax exemption extension.

Its equipment segment raked in RM299.9 million in revenue on improved products and services demand in the local and overseas markets following the relaxation of the Movement Control Order (MCO) in the quarter.

The group’s manufacturing and engineering segment saw lower revenue of RM159.9 million due to lower contribution from the aerospace sub-segment stemming from lower fan cases deliveries.

For its year-to-date, the group posted a net profit of RM76.16 million for the period, a rebound from a net loss of RM34.12 million in the corresponding six months in 2020.

Revenue for the January-June period increased 48% to RM5.4 billion versus the previous year’s RM3.65 billion, primarily attributed to the higher revenue from the automotive and equipment segments following the MCO relaxation.

The group expects the automotive sector to remain challenging but it is taking the necessary measures to increase production and delivery of vehicles to work towards achieving its annual sales targets, taking into consideration the encouraging orderbook, new launches and the sales tax exemption continuation until year-end.

UMW expects the Covid-19 pandemic to continue impacting its equipment segment.

“The lockdowns imposed in the respective countries have resulted in curtailed operations.

“Furthermore, for the heavy equipment sub-segment, the political situation in Myanmar is also expected to adversely impact its performance,” it said.

It added that the higher gold prices and positive outlook for the construction sector may soften the impact on the sub-segment.

The industrial equipment sub-segment is expected to sustain its performance as it continues to focus on expanding its equipment rental business while extending recovery packages to its customers in the essential services sectors such as food and beverage, medical and pharmaceutical, logistics and warehousing.

The group foresees its manufacturing and engineering segment, namely for auto components and lubricants sub-segments, to remain challenging for the second half of 2021 (2H21) amid the prolonged lockdown amid disrupted supply chain and production.

“The encouraging orderbook, especially for the replacement equipment market is expected to cushion the impact.

“The aerospace sub-segment continues to be impacted by the travel restrictions brought about by the Covid-19 pandemic, however, with the gradual opening up of international travel, the aviation industry is expected to gradually recover with increased delivery of fan cases in 2H21,” it said.

UMW will seek to improve its resilience through operational efficiencies and effective cost management to face the pandemic.

UMW shares ticked 2.89% higher to RM3.20 at the close of trade yesterday, valuing the company at RM3.74 billion.