PETALING JAYA: UMW Holdings Bhd, the exclusive distributor of Toyota vehicles, plans to launch a pipeline of new car models this year to mitigate the impact of the market slowdown.
The automotive, equipment and manufacturing conglomerate said yesterday that despite the subdued market environment, it was cautiously optimistic of improving demand from customers post-MCO.
UMW said it expected the group’s automotive segment to benefit from the recent announcement of 100% sales tax exemption on completely knocked down vehicles and 50% exemption for completely built-up vehicles effective from June 15 to Dec 31 this year.
UMW saw its net profit fall 48.8% to RM44.3mil for the first quarter ended March 31,2020, from RM86.5mil in the corresponding quarter last year in tandem with lower revenue.
Consequently, its earnings per share fell to 3.79 sen from 7.40 sen previously.
During the quarter in review, UMW’s group revenue fell 23.8% to RM2.12bil from RM2.78bil in the previous corresponding quarter.
“The decrease in revenue was mainly due to lower sales in the automotive and equipment businesses, following disruptions caused by the Covid-19 pandemic, ” UMW explained.
For the quarter, revenue from its automotive segment fell 35% year-on-year (y-o-y) to RM1.59bil, mainly due to a lower number of vehicles sold. Pre-tax profit from the segment fell 53.3% y-o-y.
Revenue from its equipment segment fell 11.8% y-o-y to RM289.2mil, while pre-tax profit fell 5.5% y-o-y to RM25.8mil, due to disruptions caused by the Covid-19 pandemic.
Meanwhile, its manufacturing and engineering segment’s revenue fell 24.4% y-o-y to RM248.5mil, mainly due to operational disruptions, affecting all sub-segments, following the implementation of MCO in mid-March 2020. In line with the decrease in revenue, the segment’s pre-tax profit fell 65% y-o-y to RM10.5mil.
For the remaining part of the year, UMW acting president and group CEO Azmin Che Yusoff said the group would strive to maintain its performance in 2020 despite the unprecedented challenging business environment.
“We will continue to focus on strengthening our core business segments and strategic cost optimisation initiatives to improve our business performance and operational productivity, ” he said.
“Although the business environment will continue to be challenging in 2020 due to exogenous factors, with policies set in place by the government to support performance across sectors, we are confident of delivering value for our shareholders, ” he added.
UMW’s shares fell 14 sen to close at RM2.65 yesterday.
The automotive segment aside, UMW expected its equipment business to remain challenging. The company said its heavy equipment sub-segment could face sluggish domestic demand due to the delay in implementation of projects caused by the Covid-19 pandemic and slowdown in some sectors in which it operates.
“Nevertheless, encouraging demand in mining and construction sectors in its overseas operations could help to soften the impact, ” it said.
The industrial equipment sub-segment, on the other hand, would continue to focus on expanding its equipment rental business while extending recovery packages to its customers, especially those in the small and medium enterprises to cushion the impact of Covid-19 on their businesses, UMW said.
As for its manufacturing & engineering segment, UMW said while new vehicle sales was projected to decline this year, the demand for auto components in the after-sales and overseas markets was expected to be sustainable. “The lubricants sub-segment will continue to leverage on its OEM partners and strengthen its domestic sales and export to Asean countries, ” it explained.
“While we are expecting a downward impact to the Aerospace sub-segment following the Covid-19 pandemic, the group is partially sheltered by firm fan case orders received for the rest of the year, ” it added.
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