UWM net profit more than triples

PETALING JAYA: UMW Holdings Bhd saw its first-quarter net profit more than triple upon the exit from its listed oil and gas (O&G) business and improvement in profit margins, driven by a strong ringgit against the US dollar.

Net profit surged to RM74.08mil in the first three months of 2018 from RM20.17mil a year earlier, UWM said in a filing with Bursa Malaysia.

The group has declared an interim single-tier dividend of five sen per share.

Revenue for the quarter, however, declined 10% or RM280mil to RM2.42bil from RM2.7bil previously due to lower sales for passenger cars.

“Following the exit from the listed O&G segment, the group is now well-positioned with improved earnings visibility and growth,” said president and group chief executive officer Badrul Feisal Abdul Rahim in the statement.

He said the operations in the O&G (unlisted) segment have been scaled down and the management is actively executing the divestment strategy.

“Moving forward, we are confident of the long-term prospects of our three core operations, as demonstrated by our ongoing investments in the automotive, equipment and manufacturing and engineering businesses,” Badrul Feisal said.

He pointed out that the group’s growth strategy would be underpinned by continued expansion in the three core segments to deliver value to its shareholders.

Badrul Feisal said UMW’s automotive sector saw healthy results despite challenges, including intense competition and strict lending guidelines enforced by financial institutions.

During the first quarter, the automotive segment saw a 45% jump in pre-tax profit to RM125.94mil. Revenue for the segment, meanwhile, declined by 14% to RM1.88bil in the quarter from RM2.19bil registered in the previous corresponding quarter.

“Despite lower revenue contribution, pre-tax profit improved, mainly contributed by better performance from associate companies and improved profit margin as the ringgit remained strong against the US dollar,” UMW said.

In the equipment segment, UMW registered a revenue of RM373mil in the first quarter of 2018, higher than the RM342.4mil reported previously, lifted by improved export sales on a major customer order.

Moving forward, the group said it expected the automotive segment to remain challenging with the continuation of strict lending guidelines and weaker consumer demand.

In the equipment segment, UWM said it expected the heavy equipment sector to perform satisfactorily due to higher demand arising from the anticipated growth in the construction sector. “Industrial equipment within the equipment segment is also projected to see strong growth, with improved demand in Malaysia, Singapore and Vietnam,” it said.