SHAH ALAM, 27 February 2017 – The Group’s overall financial performance was adversely impacted by the losses of the O&G division due to the industry downturn. Nonetheless, UMW Holdings Berhad’s other non-oil and gas businesses – Automotive, Equipment and Manufacturing & Engineering – remained profitable throughout 2016.

•  Group’s pre-tax loss due primarily to the impairments and provisions for Oil & Gas businesses
•  Automotive, Equipment and Manufacturing & Engineering segments resilient despite intense competition and strengthened USD
•  Other core businesses remained profitable in 2016

•  Oil & Gas exit will strengthen the balance sheet, financial position, and refocusing on its core businesses

President and Group Chief Executive Officer of UMW Holdings Berhad, Badrul Feisal bin Abdul Rahim, said: “Despite the tough economic conditions, the Group is encouraged and emboldened by the resilience shown by the other core business segments in sustaining profitability under exceptionally challenging operating circumstances. With the Group’s strategic decision to exit the O&G sector, UMW Holdings’ future prospects have been enhanced with its financial position and performance expected to improve moving forward.”

For the fourth quarter of 2016, with the inclusion of the Listed and Non-listed Oil & Gas assets, the Group registered a pre-tax loss of RM2,098.0 million as compared to a pre-tax loss of RM330.2 million in the corresponding quarter of last year. This result includes the operational losses and impairments of both the Listed and Non-Listed Oil & Gas segments coupled with provisions for financial guarantee contracts. However, the Group’s other core businesses – Automotive, Equipment and Manufacturing & Engineering – posted a combined profit before tax (PBT) of RM178.2 million as compared to RM293.6 million in the corresponding quarter of 2015. For 2016, these segments registered a collective PBT of RM663.8 million as compared to RM1,104.2 million in 2015.

Overall, the Group registered revenue of RM3,062.3 million for the last quarter of 2016, which was 26.8% lower than the corresponding quarter in 2015. The Group recorded full-year revenue of RM10,965.1 million, a decrease of 24.1% over the previous year. Excluding the impairment of assets and provision for financial guarantee contracts, the Group posted a profit before tax of RM89 million in 2016. The lower profit recorded was contributed by the operating losses of the Oil and Gas listed and non-listed businesses. After taking into account the impairments and provisions, the Group registered a pre-tax loss of RM2,153.8 million for 2016 as compared to a PBT of RM269.7 million in 2015.

The Automotive segment recorded profit before tax (PBT) of RM143.6 million for the 4th quarter of 2016, a decrease of 42.7% compared to the corresponding quarter in 2015. The segment registered full-year PBT of RM493.1 million for 2016, a drop of 42.7% from the previous year. The performance of this segment is in tandem with the significant drop in the Total Industry Volume (TIV) by 13%. The decrease in profitability is due to continued weakening of the ringgit and weak consumer sentiment.

The Equipment segment registered PBT of RM30.6 million for the current quarter, a slight improvement over the corresponding quarter in 2015. Full-year PBT for the segment stood at RM146.7 million, a decrease of 35% from the previous year. Profitability of the segment was affected by slowing demand for heavy equipment and heightened competition in the construction sector. In addition, operations in Myanmar continued to be constrained by the restriction imposed on heavy equipment importation by the national government.

Manufacturing & Engineering full-year PBT surged by 42.9% over the previous year to RM24 million. For the 4th quarter 2016, this segment posted PBT of RM4.0 million as compared to RM13.9 million for the corresponding quarter. The 4th quarter performance was adversely affected by weak market sentiments in the lubricant and auto component businesses.

Badrul Feisal explained: “The operating performance of the Group’s non-Oil & Gas businesses moderated under challenging operating circumstances in 2016. The successful execution of the O&G withdrawal strategy will be the platform for the Group to emerge as a stronger, more competitive industrial conglomerate with increased capacity for expansion. It will remove significant debt overhang and reinvigorates our financial position to enable fresh investments which will spur new growth impetus of our core segments.”

“For 2017, we anticipate stable revenues comparable to the previous year. Moving forward, we are confident of the long-term prospect of our three core businesses as demonstrated by our on-going investments in Automotive, Equipment and Manufacturing and Engineering businesses. Our growth strategy will be underpinned by continued expansion in these three core sectors.”