Driven by higher contribution from the Automotive and Equipment segments, UMW Holdings Berhad recorded revenue of RM2.4 billion for the second quarter ended 30 June 2021 (“2Q 2021”), an increase of 59.8% compared with the corresponding quarter ended 30 June 2020 (“corresponding quarter”). Consequently, the Group registered profit before taxation (“PBT”) of RM32.6 million compared with loss before taxation of RM58.8 million in the corresponding quarter which was impacted by the first Movement Control Order (“MCO”). The Group recorded lower loss attributable to shareholders (“LATAMI”) of RM21.1 million for 2Q 2021 compared with LATAMI of RM78.4m for 2Q 2020.
For the first half of 2021 (“1H 2021”), the Group recorded profit attributable to shareholders (“PATAMI”) of RM76.2 million at the back of RM5.4 billion revenue, compared with LATAMI of RM34.1 million at the back of RM3.6 billion revenue for 1H 2020. The Group’s gearing, being total debt over equity, remained low at 0.35 times, with healthy cash and cash equivalents, and money market investments at RM2.6 billion at end of June 2021.
Vehicle sales increased in 2Q 2021 supported by introduction of new models and the sales tax exemption. Consequently, the Automotive segment’s revenue surged by 79.8% to RM2.0 billion compared with the corresponding quarter which was impacted by the MCO. This, coupled with improved contribution from an associated company led to PBT of RM34.6 million in 2Q 2021 against loss before taxation (“LBT”) of RM41.7 million in 2Q 2020. The Malaysian Automotive Association, due to the prolonged lockdown, has revised downwards its forecast for the 2021 Total Industry Volume (“TIV”) to 500,000 units from 570,000 units announced early this year. Notwithstanding the challenges confronting the automotive industry, the Group will take the necessary measures to increase production and delivery of vehicles to work towards achieving its annual sales targets taking into consideration the encouraging orderbook, the introduction of new models as well as the extension of the sales tax exemption until 31 December 2021.
Due to higher demand for its products and services in both its local and overseas operations, the Equipment segment’s revenue increased by 28.6% to RM299.9 million in 2Q 2021, while PBT grew by 29.1% to RM31.8 million. However, the Covid-19 pandemic continues to impact the performance of the Equipment Segment. For the Heavy Equipment sub-segment, the political situation in Myanmar is also expected to adversely impact its performance. Nonetheless, the higher gold prices and positive outlook for the construction sector may soften the impact on the sub-segment.
The Industrial Equipment sub-segment is expected to sustain its performance as it continues to focus on expanding its equipment rental business while extending recovery packages to its customers in the essential services sectors such as food and beverages, medical / pharmaceutical, and logistics and warehousing.
Manufacturing & Engineering segment
The Manufacturing & Engineering segment’s revenue declined by 12.8% in 2Q 2021 mainly due to the lower number of fan cases delivered by the Aerospace sub-segment. As a result, the segment recorded LBT of RM6.1 million. The prospects for both the auto components and lubricants sub-segments remain challenging for 2H 2021, amid the prolonged lockdown that has adversely impacted the entire supply chain as well as production. However, the encouraging orderbook especially for the Replacement Equipment (“RE”) market is expected to cushion the impact. The Aerospace sub-segment also continues to be impacted by the travel restrictions brought about by the Covid-19 pandemic. However, with the gradual opening-up of international travel, the aviation industry is expected to gradually recover with increased delivery of fan cases in 2H 2021.
UMW Holdings Berhad’s President and Group CEO, Dato’ Ahmad Fuaad Kenali said, “While Covid-19 remains a challenge to UMW’s operations, the Group has responded with strategies and initiatives to mitigate the situation, by intensifying efforts to improve operational efficiency and cost effectiveness to enhance competitiveness and resilience. The Group expects the overall performance to remain challenging for the second half of the year due to the Covid-19 pandemic. Nevertheless, the Group will constantly assess its strategies and initiatives, and continue to drive transformation, to create value and generate better returns to its shareholders.”