Strong first-quarter performance for UMW

Group anticipates satisfactory results this year

“The group remains cautious of the various external headwinds, including the lingering threat of Covid-19, the persistent and prolonged supply chain disruptions, as well as the impact of further escalation of geopolitical conflicts.”

Datuk Ahmad Fuaad Kenali

PETALING JAYA: UMW Holdings Bhd’s net profit surged 26.8% to Rm101.2mil for the first quarter ended March 31, 2022 (1Q22) compared with Rm79.8mil in the previous comparative quarter, mainly attributed by increase in revenue as the economy recovers from the pandemic.

The group’s revenue rose by 23.6% to Rm3.65bil in 1Q22 compared with Rm2.95bil in the previous corresponding quarter due to strong contribution from its automotive and equipment segments as demand improved following the economic recovery under the National Recovery Plan.

Commenting on the overall prospects, UMW Holdings president and group chief executive officer Datuk Ahmad Fuaad Kenali expects the transition to the endemic phase of Covid-19 to intensify economic activities locally and globally, as restrictions are further eased, and international borders reopen.

“Consistent with Bank Negara’s higher gross domestic product forecast of between 5.3% and 6.3% for Malaysia in 2022, the group anticipates its performance for 2022 to be satisfactory,” Ahmad Fuaad commented.

“Nevertheless, the group remains cautious of the various external headwinds, including the lingering threat of Covid-19, the persistent and prolonged supply chain disruptions, as well as the impact of further escalation of geopolitical conflicts,” he said.

“In view of the headwinds, the group will continue to execute its strategic initiatives focusing on driving operational efficiencies and undertaking cost optimisation activities to improve its resilience,” he added

The group’s automotive segment saw its revenue increase by 28.1% to Rm3.07bil compared with Rm2.40bil in the previous corresponding quarter, backed by higher number of vehicles sold due to the sales tax exemption as well as the introduction of new models.

In line with the higher revenue and higher share of profit from an associated company, the segment’s profit before taxation and zakat (PBTZ) surged by 41.4% to Rm205.8mil in the 1Q22 compared with Rm145.5mil in the previous comparative quarter.

“As Malaysia move to the endemic phase of Covid-19, demand for vehicles is expected to improve progressively,” the automotive conglomerate said in a statement, adding that the Malaysian Automotive Association projected the total industry volume (TIV) to increase by 18% to 600,000 units in 2022 mainly driven by the extension of sales tax exemption until June, 30 2022 and the improving consumer confidence.

“The introduction of all-new and facelift models, coupled with sales promotion campaigns, are expected to drive sales and contribute positively to the group in 2022,” it added.

Speaking of its equipment segment’s revenue, the group recorded an increase of 11.8% to Rm371.8mil in 1Q22 compared with Rm332.5mil in the previous corresponding quarter, on higher demand for the segment’s products and services in the local and overseas markets as businesses are gaining momentum due to the expected transition to the endemic phase.

According to the group, the higher revenue, coupled with cost optimisation initiatives, resulted in the segment’s PBTZ to surge by 44.8% to Rm31.8mil for 1Q22 from Rm21.9mil from the previous comparative quarter.

“The heavy equipment sub-segment stands to benefit from the increase in construction activities, as infrastructure spending picks up,” the group said, adding that high commodity prices could also potentially increase the demand for heavy equipment.

“Meanwhile, the industrial equipment sub-segment will continue to focus on growth sectors, while it continues to expand its forklift refurbishment business,” it said.

For the group’s manufacturing and engineering segment, despite recording a marginally lower revenue of Rm227.1mil in 1Q22 compared with Rm230.3mil in the previous corresponding quarter, PBTZ improved by 26.9% to Rm10.6mil mainly due to lower operating costs.

“Going forward, the projected strong growth in TIV and a higher global demand for vehicles augur well for the segment,” the group said.

The auto components sub-segment is expected to benefit from the rebound of the original equipment and replacement equipment markets to pre-covid-19 levels while the lubricants sub-segment will be increasing its production capacity to expand its footprint in the industrial lubricant sector both locally and regionally.

“The aerospace sub-segment expects demand for fan cases to improve with the resumption of international air travel,” it said. It is also continuously exploring opportunities to improve its plant utilisation and diversify its manufacturing capabilities in line with its products and customer diversification strategy,” it added.