DRB-Hicom Q2 earnings soar to RM737mil
Good results due mainly to recognition of government grant
PETALING JAYA: DRB-Hicom Bhd swung to profitability in the second quarter ended Sept 30, thanks in part to the recognition of the government’s RM1.1bil research and development reimbursement grant to Proton Holdings Bhd.
In its interim financial report, the company said it posted earnings of RM736.57mil compared to a loss of RM309.63mil a year earlier mainly due to the grant to the 50.1%-owned national carmaker and better financial performance of its operating companies.
However, the loss on disposal of Lotus Advance Technologies Sdn Bhd, amounting to RM133.19mil, reduced the overall profit.
Revenue, meawhile, rose 26.4% to RM3.34bil, mainly contributed by growth in the revenue from its services and property, asset and construction (PAC) sectors, DRBHicom said.
While the automotive sector’s revenue also grew, the growth was only 1.6% compared to the services sector’s 64.2% and the PAC sector’s 352.8%.
The improved overall quarterly performance led DRB-Hicom to chalk up first halfyear earnings of RM566.86mil versus a loss of RM478.93mil during last year’s corresponding period.
Its half-year revenue jumped 29.8% to RM6.68bil, with services being the biggest growth contributor.
DRB-Hicom said the better performance in services was mainly due to the courier and logistics businesses of subsidiary Pos Malaysia Bhd, and higher sales recorded by its banking and waste management subsidiaries.
On the group’s prospects, DRB-Hicom said its board forecasts an improvement in the group’s performance for this financial year ending March 31, 2018 against the previous year’s results.
DRB-Hicom will continue to focus on its group-wide initiatives to reduce cost and improve efficiency as part of its efforts to strengthen resilience amid volatility and challenges in the external environment, it said.
Its newly-formed partnership with Zhejiang Geely Holding Group Co Ltd (ZGH), which also owns Volvo Car Corp and The London Taxi Co, is key to Proton Holdings’ turnaround plan.
It said ZGH is able to provide necessary support, especially in terms of technology sharing, product development and market expansion.
Recall that DRB-Hicom had on Sept 29, 2017, completed the disposal of a 49.9% stake in Proton to ZGH for RM460.3mil, leaving it with 50.1%. The group gained RM116.67mil on dilution of equity interest in Proton.
It also divested, at a loss of RM133.19mil, its indirect 100% stake in British sports carmaker Lotus Advance Technologies to its foreign stra- tegic partner and Etika Automotive Sdn Bhd.
According to DRB-Hicom, Proton is also currently focusing on cost-management initiatives in all its business units, while driving sales for its existing product range.
“These will gradually improve Proton’s financial and operational performance in the future,” it said.
The group noted that its automotive sector’s better performance was from a higher sales volume on the back of encouraging consumer sentiment.
“(Associate company) Honda Malaysia Sdn Bhd remains dominant in the foreign brand segment, while defence and aviation continue to contribute positively to the overall growth,” it said.
DRB-Hicom said the services sector remained a key contributor to the group, driven by rapid expansion in the logistics businesses besides the ongoing growth in concession and financial services.
“The recent roll-out of the regional logistics hub Digital Free Trade Zone by the government and key collaborations between Pos Malaysia group and major e-commerce players such as Lazada Malaysia is projected to chalk an upward trajectory for the business and further strengthen the group’s services sector,” it said.
As for the property sector, it said the sector is expected to improve with ongoing construction projects.