UMW posts RM48m net loss in 3Q21

The group also records lower revenue for the quarter at RM2b due to the lower sales 


UMW Holdings Bhd posted a net loss of RM47.89 million in the third quarter ended Sept 30, 2021 (3Q21) compared to a net profit of RM83.87 million in 3Q20, as the group suffered the impact of the movement restriction order in place during the period. 

Revenue for the quarter slipped 24.3% YoY to RM2.02 billion due to the lower sales in the automotive business as well as manufacturing and engineering segments. 

Group’s revenue came in lower as only certain operations were allowed to operate with limited capacity with the easing of the Full Movement Control Order (FMCO) restrictions from Aug 16, under the National Recovery Plan (NRP). 

On a segmental basis, UMW’s automotive segment recorded a revenue of RM1.59 billion, which was 25.2% lower than the RM2.13 billion reported in the corresponding quarter, mainly due to a lower volume of vehicles sold in the quarter. 

Ongoing shortage of semiconductor chips was another factor impacting the auto segment, the group noted in its exchange filing yesterday. 

UMW’s equipment segment recorded a revenue of RM316 million, which was marginally higher than the RM297 million in the corresponding quarter, mainly due to demand for the segment’s products and services in its local and overseas market continuing to improve in the quarter. 

It noted that the ongoing political unrest in Myanmar continues to dampen the overall segment’s performance. 

UMW’s manufacturing and engineering segment reported a revenue of RM110.3 million, which was significantly lower than the RM242.3 million reported in the corresponding quarter, mainly due to the lower contribution from all the sub-segments as businesses operations only gradually normalised with the easing of the FMCO starting Aug 16. 

For the cumulative period of nine months, UMW’s net profit declined 43.2% YoY to RM28.27 million while revenue rose 17.5% YoY to RM7.42 billion. 

The group expects the business environment to continue to remain challenging for the remainder of the year and will continue to manage the negative impact of the Covid-19 pandemic on its operations. 

Following the relaxation of the FMCO under the NRP resulting from the reduction in Covid-19 cases and increase in the national vaccination rates of the Malaysian adult population, UMW is ramping up production to meet the encouraging outstanding orderbook. 

“Demand for automotive products is expected to continue to remain strong following the extension of the sales tax exemption. 

“Although the group has managed to mitigate the impact of semiconductor chips shortage for the year, however, the group will continue to work closely with the principals and suppliers to secure a consistent supply of semiconductor chips in the medium to longer-term,” it noted. 

UMW added that the introduction of new models, including the hybrid electric vehicles (EVs), and the year-end sales promotion is expected to drive stronger sales in the final quarter of the year. 

The equipment segment business environment remains challenging and the segment will continue to improve operational efficiency and cost-effectiveness. 

UMW added that prospects for auto components and lubricants sub-segments are gradually improving as disruptions to the supply chain have progressively eased and businesses have started to ramp up production. 

It noted that demand for the replacement equipment market will continue to improve in line with the recovery of the automotive industry. 

It stated that the aerospace sub-segment is expected to benefit from the gradual reopening of international travel and the demand for the fan cases are expected to increase from 2022 onwards. 

UMW’s share prices closed five sen or 1.6% lower at RM3.08 yesterday, valuing the group at RM3.6 billion.