UMW Holdings Bhd’s Group profit before taxation (PBT) jumped more than tenfold while revenue increased by 23.5%, arising from improved contributions from all three of its core businesses.

The Automotive segment successfully capitalised on positive consumer sentiment during the Goods and Services Tax (GST)-free period; while the decision to focus on more urbanised sectors in the Equipment segment led to higher sales with increased demand in the construction sector.

The aerospace business continued to produce and deliver fan cases as per its contractual agreement with Rolls-Royce, generating higher revenue for the Manufacturing & Engineering (M&E) segment.

Overall, the Group’s net profit soared to RM128.1 million for the third quarter of 2018, against a loss of RM29.4 million recorded in the same quarter of 2017.

UMW Holdings Berhad President & Group CEO, Badrul Feisal bin Abdul Rahim said, “Our third quarter results positively reflect the continued execution of our strategic initiatives to restore profitability and momentum, following our exit from the Oil & Gas sector.”

“We are encouraged by our performance and will continue to make strategic moves to keep our core businesses abreast of its changing environment. As we move forward, the Group will place a sharper focus on driving long-term growth through expansion and fostering innovation across our portfolio, balanced with a disciplined approach to capital investment. We remain committed to delivering value to all our stakeholders.”

Overall, the Group registered revenue of RM3,299.5 million for the third quarter ended 30 September 2018, an increase of 23.5% over the RM2,671.0 million recorded in the same quarter of 2017.

Consequently, the Group posted a PBT from Continuing Operations of RM233.6 million for the current quarter which was substantially higher than the previous corresponding quarter of RM49.2 million.

Discontinued Operations posted a lower loss before taxation of RM17.8 million compared with a loss of RM29.3 million in the previous corresponding quarter.

The losses were attributable to operating expenditure incurred while the winding down of operations are being carried out in stages.

This is expected and in line with the divestment strategy of the Oil & Gas (Unlisted) segment. For nine months ending 30 September 2018, the Group registered net profit of RM326.6 million compared to a loss of RM218.5 million a year ago.

The Automotive segment registered revenue of RM2,643.4 million in the third quarter of 2018 which was 24.9% higher than the RM2,115.9 million reported in the previous corresponding quarter.

Sales improved substantially during Goods and Services Tax (GST)-free period supported by the launch of a new model during the quarter. Profit margins also improved due to cost optimisation initiatives and the strengthening of Ringgit Malaysia against the US Dollar. Subsequently, PBT increased significantly by 42.6% to RM151.3 million from RM106.1 million reported in the previous corresponding quarter.

For the third quarter of 2018, the Equipment segment registered revenue of RM403.4 million which was 9.2% higher than the RM369.3 million reported in the previous corresponding quarter.

The improved performance was attributable to higher revenue and increased demand in the construction industry. Consequently, PBT increased by 10.8% to RM43.5 million.

The M&E segment registered revenue of RM253.6 million which was 62.7% higher than the RM155.8 million reported in the previous corresponding quarter; while PBT rose to RM15.5 million from a loss of RM6.7 million.

The improved performance was contributed by higher revenue from the Aerospace business as well as better profit margins generated from a comprehensive efficiency improvement and cost optimisation programme.

Looking ahead, while the reintroduction of the Sales and Service Tax (SST) will likely have an impact on consumer demand in vehicle sales, the Automotive segment is expected to perform satisfactorily based on strong interest received in its newly launched models.

The Industrial Equipment business is expected to continue performing well in the rental sector while infrastructure development for coastal and rural roads may have a positive impact on the Heavy Equipment business.

In the M&E segment, efforts are ongoing to enhance market penetration into other ASEAN countries for its lubricant business whilst the Aerospace business is steadily increasing production to meet the expected orders from Rolls-Royce.

Overall, UMW is confident that its strategic and tactical priorities put the Group on a firm footing to achieve improved financial performance in 2018.

Twitter