O&G segment pulls down UMW Holdings’ results further

UMW oil and gas division

KUALA LUMPUR: UMW Holdings Bhd, which expects to divest both its listed and unlisted oil and gas (O&G) businesses by year-end, continued to be weighed down by the O&G segment in the first quarter ended March 31.

Except for the O&G units, all of the group’s non-oil business segments recorded profits, it said in a press statement.

Its net loss widened 114% to RM10.56mil during the quarter under review compared with a year earlier.

The biggest drag was its listed O&G segment’s (via its 55.7% stake in UMW Oil & Gas Corp Bhd) higher pre-tax loss of RM104.9mil against a loss of RM68.4mil in the same quarter of 2016.

The weak performance was due to a decline in revenue as a result of most of its rigs remaining uncontracted and idle in Q1. However, currently all seven of its jack-up rigs are contracted though it still has to struggle in a low time-charter rate environment.

The unlisted O&G segment also posted a pre-tax loss, but the RM15mil loss was much lower than the RM35.6mil loss in the same period of 2016, thanks to contributions from businesses in China.

Meanwhile, the UMW group’s automotive segment - its single biggest revenue and profit contributor - increased its pre-tax profit by 5% to RM87.07mil. Improved sales translated to higher market share for Toyota of 11.8% in Q1 this year compared with 8.0% a year earlier.

The equipment segment’s profit barely moved to RM39.55mil versus RM39.25mil previously, while its manufacturing and engineering segment fell 53% to RM4.0mil.

UMW’s revenue grew 27% year-on-year to RM2.8bil, mainly due to the 41% jump in the automotive segment’s revenue to RM2.19bil. 

On its prospects, UMW told Bursa Malaysia that the group’s performance would still be affected by the downturn in the O&G industry until the completion of its exit plan. 

The company also noted that the strong US dollar was expected to impact the business margins of the automotive segment.