UMW Holdings’ results still weighed down by O&G segment

Launch of new Toyota Camry models. IZZRAFIQ ALIAS / The Star. April 2, 2015.

KUALA LUMPUR: UMW Holdings Bhd, whose latest quarterly results no longer reflect the performance of demerged operation UMW Oil & Gas Corp Bhd, continued to incur losses due to its unlisted oil and gas (O&G) segment.

Announcing its interim unaudited results to Bursa Malaysia, the company said it recorded a loss attributable to equity holders of RM29.37mil for the third quarter (Q3) ended Sept 30, 2017, compared to a loss of RM128.83mil.

Revenue shrank 4.8% to RM2.67bil from a year earlier due to reduction in automotive units sold and the cessation of business of its Oman O&G operations.

All of UMW’s business segments - automotive, equipment, and manufacturing & engineering - except O&G (unlisted) were profitable during the quarter under review.

The O&G (unlisted) segment posted a pre-tax loss of RM35.59mil in Q3 2017, a slight improvement against a loss of RM36.14mil a year earlier due to the lower share of losses in associated companies in China.

Following the completion of the demerger exercise, results from UMW Oil & Gas are no longer included as part of the group’s performance effective July 1.

For the nine-month financial period, UMW’s loss widened to RM218.51mil compared to RM124.38mil in the previous year’s corresponding period.

The group posted a pre-tax loss from discontinued operations of RM283.2mil in January-September 2017, up from RM265.5mil in the same period of 2016. This was mainly attributed to the loss from the demerger of UMW Oil & Gas of RM126.9mil.

Its automotive segment’s profit before taxation, meanwhile, fell 16.4% to RM292.1mil in the nine-month period.

It said the lower profit was largely due to the compressed profit margin as the US dollar remained strong against the ringgit.

However, UMW said the outlook for the segment was expected to improve in the last quarter of 2017.

The total industry volume for the fourth quarter is expected to improve due to the boost from the Malaysia 2017 Autoshow to be organised by the Malaysia Automotive Institute this month, year-end promotions, and new model launches.

On the decision for the group to exit from the O&G segment, UMW said management was actively implementing its action plans towards this direction.

On Sept 28, the board formed a board committee - the Value Group Execution Committee - to provide strategic guidance and/or direction to the management and to make recommendations to the board on proposed action plans/resolutions/strategies to achieve the intended objective of exiting the investments under the O&G (unlisted) segment.
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