UMW EYES RETURN TO POLE POSITION
Company banking on Toyota CKD models to meet 14pc sales growth
UMW Holdings Bhd eyes a return to the top spot in the non-national market via Toyota, starting with an aggressive volume target this year, as part of its mid- to long-term plan.
Its spokesperson said the company planned to achieve via the expansion of its completeknocked-down (CKD) model lineup and introduction of more volume-driven models in the future, supported by rising production capacity from its new Bukit Raja plant.
“With more CKD models, we will also be able to look into increasing the local content that will enable the new models to be more competitively priced,” the spokesperson told NST Business yesterday.
According to AmInvestment Bank (AmInvest), two key Toyota models open the year in anticipation of a softer first half — Vios and Yaris.
Vios started deliveries this month while the Yaris hatchback will be launched in the second quarter.
AmInvest said UMW was targeting 14 per cent sales growth to 75,000 units this year, from 67,000 units last year, with Vios contributing 40 per cent of sales.
However, the investment bank said it expects lower growth of eight per cent to 71,000 units as it would be difficult for Toyota to build and sustain momentum.
“Toyota leaned heavily on last year’s tax holiday, deriving 45 per cent of total sales from the threemonth window. In comparison, Honda maintained steady sales beyond the spike of that period,” it said.
Toyota launched the brand new Vios here last month.
UMW said the new plant had a yearly production capacity of 50,000 units on a single-shift operation that can easily be doubled up if needed.
“With Vios’ 2019 sales target of 30,000 units, in addition to the planned production of Yaris, 80 to 90 per cent utilisation is very likely to be achieved,” it said.
UMW also hopes to break even in its aerospace business within “a reasonable time”, as it is gradually amping up production at its Rolls Royce plant in Serendah, Selangor.
“It (the plant) is still in the ramp-up production stage. Nevertheless, production is on track with sustained orders from RollsRoyce,” it said.
TA Securities said it expects UMW’s aerospace business to narrow its losses in financial year (FY) 2019, break even in FY 2020 and start contributing meaningful profits in FY2021.
It said to achieve a break-even, the plant’s production needs to be in the range of 150 to 160 units of fan case, or about 60 per cent utilisation rate.
The plant has an annual capacity of 250 units of fan cases for the Trent 1000 engine and Trent 7000 engine.
“Post-completion of the Rolls Royce plant, UMW delivered its maiden aircraft engine fan case in late FY2017. Thereafter, UMW has been ramping up production in the plant with a delivery target of 80 units in fiscal year 2018.
“Based on our estimation, every 10 points of improvement in the plant’s utilisation rate may improve UMW’s bottom line by RM10 million to RM12 million,” said TA Securities.