UMW's semi-submersible drilling rig, Naga 1 (for CR coffeetable book)
KUALA LUMPUR: UMW Holdings Bhd
, hit by massive operating losses at its listed and non-listed oil & gas (O&G) businesses, had one of its worst-performing years in 2016 with a loss attributable to shareholders of RM1.69bil.
The industrial giant’s loss widened from RM37.2mil in the preceding year, as the O&G operations took asset impairment of RM1.16bil (RM780.2mil for the listed segment and RM381.9mil for the unlisted one). The UMW group also recognised a RM750mil provision made for O&G-related financial guarantee contracts.
Revenue shrank by almost a quarter (-24.1%) to RM10.97bil.
The O&G listed and unlisted segments, which UMW Holdings last month said it intended to hive off, incurred pre-tax losses totalling RM1.93bil.
UMW Holdings’ other business segments - automotive, equipment, and manufacturing & engineering - were all profitable in 2016. However, the automotive segment’s pre-tax profit contribution fell 42.7% to RM493.1mil while the equipment business’ profit dipped 35.2% to RM146.7mil.
The manufacturing & engineering segment posted a 42.7% jump in profit but it had a small starting base of RM16.8mil.
In its quarterly results announcement to Bursa Malaysia, UMW Holdings said excluding the impairments and provisions for financial guarantee contracts, the group posted a profit before taxation of RM89mil,
UMW Holdings had last month announced its plan to exit from the O&G industry, in which it was represented by its 55.7% owned listed subsidiary UMW Oil & Gas Corp Bhd (UMWOG) and other investments held outside UMWOG.
“In pursuing this, the company expects that it may have to impair such investments, the details of which are being assessed as part of the annual audit impairment testing exercise,” it said.
Meanwhile, UMWOG reported on Monday a bigger net loss of RM1.19bil for FY16 (FY15: RM369.3mil) due to low levels of income-generating activities as well as the RM780.2mil asset impairment loss.
The drilling and oilfield services provider, a 55.7% owned subsidiary of UMW Holdings, announced to the exchange that its revenue shrank 61.8% to RM320.8mil.
The drilling services segment contributed the bulk (RM1.16bil) of the total loss.
On its prospects, UMWOG said the group had secured an up-to-18-months contract from Petronas Carigali Sdn Bhd in January and two of its jack-up rigs are due to start operations in April.
“The group is also currently in various stages of tendering for a number of local and overseas contracts and is optimistic on achieving a significant increase in asset utilisation this year,” it said.
UMWOG said the group expected to improve its financial performance as the number of idling assets fell. Further improvement in the second half of 2017 is expected on completion of its ongoing corporate exercises.
Limited time offer:
Just RM5 per month.
