KUALA LUMPUR: MBM Resources Bhd is expected to ramp up its alloy wheel production to between 12,000 and 15,000 units per month in the first half next year, from the current level of 3,000 to 4,000 units.

The increase in production is due to the recently secured supply contract for a major car model, which group managing director Looi Kok Loon declined to reveal.

Looi said the firm’s JV company Oriental Metal Industries (M) Sdn Bhd (OMI), which manufactures steel and alloy wheels, is expected to improve its performance in December and narrow its losses next year. “At the moment, we are averaging at about 3,000 to 4,000 units a month. So, it is very low and that is why we are operating at a loss. But we should see that improve significantly,” he told reporters at MBM Resources’ extraordinary general meeting yesterday.

MBM Resources on Tuesday announced that its auto parts manufacturing revenue fell 3.7% to RM95.5 million and operating profit slumped 49.3% to RM7.6 million.Overall, the company registered a 27.4% drop in 3Q net profit to RM25.5 million from RM35.1 million previously. Revenue fell nearly 12% to RM485.1 million from RM549.3 million.

Looi regarded the weak 3Q results as “transitional and not structural decline”. “This third-quarter [results] to me are historical. It is not a structural decline, which means that it is not permanently declining, but it is a transition,” he said.

Moving forward, Looi expects 25%-owned associate Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) order book, which he deemed “pretty healthy”, to be reflected in the 4Q.  He said MBM Resources’ major investments in three new plants — one each in Perodua, 42%-owned Hino Motors Manufacturing (M) Sdn Bhd and OMI — would see a “full swing” in production next year.

This article first appeared in The Edge Financial Daily, on November 20, 2014.