- Financial performance in 3Q 2021 was impacted by the Full Movement Control Order.

KUALA LUMPUR, 29 November 2021 – The implementation of the Full Movement Control Order (“FMCO”) had significantly impacted UMW Holdings Berhad’s financial performance for the third quarter ended 30 September 2021 (“3Q 2021”). Revenue declined by 24.3% to RM2,016.4 million compared with the RM2,663.3 million reported in the corresponding quarter ended 30 September 2020 (“corresponding quarter”). Consequently, the Group reported a lower profit before taxation and zakat (“PBTZ”) of RM16.5 million in 3Q 2021 compared with the RM159.5 million registered in the corresponding quarter.

Nevertheless, for the first nine months of 2021, the Group’s revenue increased by 17.5% to RM7,415.7 million compared with the RM6,312.3 million registered for the same period of 2020, primarily contributed by the Automotive and Equipment segments following the longer sales tax exemption period and the relaxation of the FMCO. In line with the higher revenue, PBTZ increased by 29.3% to RM211.8 million. The Group recorded profit attributable to shareholders (“PATAMI”) of RM28.3 million for the first nine months of 2021. The Group’s gearing, being total debt over equity, remained low at 0.35 times, with a healthy cash and cash equivalents and money market investments of RM2.7 billion at the end of September 2021.

Automotive segment

Vehicle sales in the third quarter of the year were adversely impacted by the FMCO. Consequently, the Automotive segment’s revenue declined by 25.2% to RM1,590.8 million. In line with the decline in revenue and lower share of profits from an associated company, the segment recorded a lower PBTZ of RM27.4 million compared with the RM131.6 million in the corresponding quarter. The Group is ramping up production to meet the encouraging outstanding order book and demand is expected to continue to remain strong following the extension of the sales tax exemption until 30 June 2022 as announced in Budget 2022 recently. Introduction of new models, including the hybrid electric vehicles, as well as the year-end sales promotion are expected to drive stronger sales in the final quarter of the year.

Equipment segment

The Equipment segment’s revenue increased by 6.4% to RM316.0 million in 3Q 2021 due to the improved demand for its products and services in both its local and overseas operations. However, the segment registered a lower PBTZ of RM24.3 million compared with the RM34.0 million reported in the corresponding quarter due to the higher losses in its Myanmar operations which has been adversely impacted by the ongoing political unrest. The Heavy Equipment sub-segment’s performance will continue to be impacted by the political situation in Myanmar. Notwithstanding this, the negative impact of Myanmar’s operation is partially mitigated by the higher gold prices as well as positive outlook for the construction sector in the other countries in which the segment operates. The Industrial Equipment sub-segment is expected to sustain its performance as it continues to focus on expanding the equipment rental business while extending recovery packages to its customers to remain competitive and relevant.

Manufacturing & Engineering segment

The Manufacturing & Engineering segment’s revenue declined by more than 50% in 3Q 2021 as all three sub-segments – Auto components, Lubricants and Aerospace – registered lower sales. As a result, the segment recorded a lower PBTZ of RM8.2 million. The prospects for the Auto components and Lubricants sub-segments are gradually improving as disruptions to the supply chain have progressively eased and businesses have started to ramp up production. In addition, the demand for the replacement equipment market will also continue to improve in line with the recovery of the automotive industry. The Aerospace sub-segment is expected to benefit from the gradual reopening of international travel and the demand for the fan cases is expected to improve from 2022 onwards.

Overall prospect

UMW Holdings Berhad’s President and Group CEO, Dato’ Ahmad Fuaad Kenali said, “The Group expects the economic situation to remain challenging for the remainder of the year due to the Covid-19 pandemic. Nevertheless, the Group will intensify efforts to improve its resilience through operational efficiencies and effective cost management, to continue to deliver value to its shareholders. In addition, the production and demand for the Group’s products and services is improving following easing of the FMCO restrictions and the Group is hopeful of a full recovery by next year.”