DRB-Hicom Q2 net losses at RM309m

DRB-Hicom's disposals would enable it to consolidate its logistics business under Pos Malaysia.

KUALA LUMPUR: DRB-Hicom Bhd net losses widened in the second quarter ended Sept 30, 2016 due to the weak financial performance of companies in the automotive and defence sectors and also exceptional items.

It said on Tuesday its net losses jumped to RM309.63mil from earnings of RM3.89mil a year ago. Its revenue fell 18.7% to RM2.64bil from RM3.25bil a year ago. Loss per share was 16.02 sen compared with earnings per share of 0.2 sen.

For the six months ended Sept 30, 2016, its net losses widened sharply to RM478.93mil from net losses of RM15.82mil in the previous corresponding period. Its revenue fell 17.0% to RM5.144bil from RM6.204bil.

“In this current volatile and difficult operating environment, the group’s performance for the financial year ending March 31, 2017 will continue to remain challenging,” it said. 

Commenting on its results,  DRB-Hicom said its financial results included exceptional items of RM388.9mil. 

“The losses were attributed to several factors. DRB-Hicom had to re-measure their previously held 32.21% equity in Pos Malaysia in accordance with Financial Reporting Standard 3 on business combinations, resulting in a re-measurement loss of RM130mil,” it said. 

The group re-measured its previously held 32.21% equity interest in Pos Malaysia at its acquisition-date fair value of RM3.26 per share.

“Further, due to the recent adverse foreign currency movements, the group also incurred unrealised foreign exchange losses arising from the re-translation of certain payables and borrowings denominated in foreign currencies. 

“The continued weak demand in the automotive sector also impacted the performance of the group’s automotive companies on the back of decline in total industry volume by 13.8% for the nine months of 2016 compared with same period last year,” it said.

To recap, in September 2016, DRB-Hicom completed the consolidation of the logistics businesses under Pos Malaysia and increased its stake from 32.21% to 53.50%. 

“The Group is now in a better position to capitalise opportunities within the sector. 

“Meanwhile, the recent completion of the divestment of the entire equity in Corwin Holding Pte. Ltd. (Singapore) is expected to enhance the financial performance of the group,” it said.

Drb-Hicom said it was also positive on its search for a foreign strategic partner for its subsidiary, Proton Holdings Bhd.

“The on-going process has now arrived at a shortlist of three global automotive companies. The group remains confident that Proton will complete the exercise in the first half of calendar year 2017. 

“Separately, Proton has also completed the planned launch of all of its four new models, and this is expected to improve the carmaker’s performance. 

“Elsewhere in the automotive segment of the group, the annual aggressive year-end sales and marketing campaigns are expected to boost sales in the typically slower period between October and December 2016,” said the company.