SHAH ALAM, 27 February 2018 – UMW Holdings Berhad’s Automotive and Equipment segments remained profitable in the fourth quarter of 2017 despite challenging operating conditions due to intense competition and weaker demand. Furthermore, both the Equipment and Manufacturing & Engineering (M&E) segments achieved higher revenue compared with the same quarter of 2016. However, M&E segment registered losses due to start-up operating expenses incurred by the aerospace business. Meanwhile, the reclassification of the remaining Oil & Gas companies into Assets Held for Sale resulted in a write down to the fair value of the Group’s remaining Unlisted Oil & Gas assets.

– Group revenue from Continuing Operations increased by 6% in 2017, as all three core business segments registered higher revenue.

– Automotive and Equipment segments continued to be profitable; Manufacturing & Engineering segment’s profitability was affected by pre-operating expenses incurred by the aerospace business.

– Financial Year 2017 results

For the fourth quarter of 2017, the Group registered a profit before taxation (PBT) of RM17.6 million from Continuing Operations as compared to a loss before taxation of RM542.8 million in the same quarter last year. The lower PBT, however, was mainly due to a provision for the anticipated early settlement of a guaranteed loan of RM254.0 million as compared to a charge on re-measurement of the financial guarantee contract of RM705.0 million in 2016. Excluding the provision, the Group would have reported a profit before taxation of RM271.6 million. For the financial year 2017, the Group registered PBT of RM252.9 million from Continuing Operations, a robust turnaround compared to the pre-tax loss of RM242.5 million in 2016.

The write-down of assets to fair value and the write-down on inventory contributed to the consolidated pre-tax loss of RM394.8 million in the fourth quarter of 2017, significantly lower than the pre-tax loss of RM2,074.5 million in the corresponding quarter of 2016. Subsequently, the Group registered a consolidated pre-tax loss of RM549.9 million for financial year 2017 compared to the pre-tax loss of RM2,130.2 million in 2016.

The Group’s core businesses – Automotive, Equipment and Manufacturing & Engineering – posted a combined PBT of RM168.2 million in the fourth quarter of 2017 as compared to RM182.0 million in the corresponding quarter of 2016. For full-year 2017, these segments registered aggregate PBT of RM558.1 million as compared to RM667.2 million in 2016.

President and Group Chief Executive Officer of UMW Holdings Berhad, Badrul Feisal bin Abdul Rahim, said: “We are encouraged by the performance of our core business segments in sustaining profitability despite the challenging operating conditions. Our overall results, as expected, were affected by the Unlisted Oil & Gas segment which has now been reclassified into assets held for sale. We have divested a few companies in 2017 and target to complete the divestment of the remaining companies in 2018. Consequently, we do not expect any adverse material impact to this segment moving forward, hence we expect for the Group to return to profitability in 2018.”

Overall, the Group registered revenue of RM2,954.7 million from Continuing Operations for the fourth quarter ended 31 December 2017, marginally higher than the RM2,937.9 million recorded in the same quarter of 2016. The increase in revenue was contributed by the Equipment and M&E segments. For the full-year, the Group recorded revenue from Continuing Operations of RM11,046.5 million, an increase of 5.8% or RM609.7 million over the previous year. All three core business segments recorded higher revenues for the year.

The Automotive segment recorded PBT of RM141.6 million for the fourth quarter of 2017, a decrease of RM5.8 million or 3.9% compared to the corresponding quarter in 2016, mainly due to lower contribution from the Perodua Group. The segment registered full-year PBT of RM433.7 million, lower by 12.7% or RM63.2 million compared with RM496.9 million reported in 2016. The moderate decrease in profitability was due to compressed margins as the US Dollar remained relatively strong against ringgit. In addition, the contribution from the Perodua Group was lower in 2017, in line with the mild drop in vehicle sales.

The Equipment segment registered PBT of RM29.6 million for the last quarter of 2017, marginally lower than the RM29.9 million recorded in the corresponding quarter in 2016. Nonetheless, revenue contribution for full-year 2017 improved by 5.3% driven by the strong demand for product support sales in the heavy equipment operations. Full-year PBT for the segment moderated slightly from RM145.6 million in 2016 to RM140.6 million in 2017 due to the provision for slow moving inventory in the heavy equipment operations.

The Manufacturing & Engineering segment registered a loss before taxation of RM3.0 million in the last quarter, compared to a PBT of RM4.7 million in the same quarter of 2016. This was mainly due to start-up operating expenses incurred by the aerospace business. For the full-year, revenue contribution rose by 7.3% or RM44.1 million to RM645.6 million mainly contributed by the auto components business. However, the segment posted an expected loss before taxation of RM16.3 million as opposed to a PBT of RM24.6 million in 2016 due to the start-up losses in the aerospace business.