KUALA LUMPUR (Feb 18): The Edge weekly in its latest edition said that it has not been an easy 16 months for Badrul Feisal Abdul Rahim since he took over as UMW Holdings Bhd’s president and group CEO on Oct 1, 2015.

In its cover story, the Edge’s Khairie Hisyam Aliman and Adam Aziz wrote that just months into his tenure, Badrul had the dubious honour of presenting the group’s worst full-year financial results since 1998.

For the financial year ended Dec 31, 2015 (FY2015), UMW posted a net loss of RM37.2 million on revenue of RM14.44 billion as lower income from its automotive division was exacerbated by widening losses in its oil and gas (O&G) operations.

It was UMW’s first full-year loss in 17 years, and the night got darker in FY2016, his first full year as CEO, Badrul tells The Edge.

UMW is set to release its FY2016 numbers on Feb 27.

The Edge cited Badrul as saying that 2016 was going to be a bad year.

“We are expecting losses and I think we will see a new low [compared with 2015].

“The most important thing is that we are on the right track to recovery from 2017 onwards,” it quoted him as saying.

The weekly said that for the nine-month period up to Sept 30, 2016, UMW posted a revenue of RM7.9 billion, down 22.9% from the previous corresponding period. Its cumulative net loss stood at RM322.2 million compared with a net profit of RM930.7 million the year before.

Disposing of its listed O&G arm, UMW Oil & Gas Bhd (UMWOG), is the first step in the group’s road to recovery as it refocuses on its remaining three core divisions — automotive, equipment, and manufacturing and engineering.

On Jan 19, UMW announced that it would exit UMWOG, passing on its 55.72% stake to its shareholders via a distribution-in-specie pending their approval via an extraordinary general meeting to be held at end-March or in early April.

For perspective, had it not been for the combined pre-tax loss of RM834.5 million from its O&G operation in FY2015, UMW’s pre-tax income would have been roughly RM1.1 billion.

This may explain the market’s enthusiastic response to the news of the disposal. On Jan 20, the day after the announcement, UMW’s shares surged 9.96% to end at RM5.08. It was the stock’s biggest single-day gain since August 1999.

To recap, the divestment is part of a consolidation exercise that centres on UMWOG. Also on Jan 20, UMWOG and Ekuiti Nasional Bhd (Ekuinas) signed two separate share purchase agreements that were collectively worth RM721.61 million. The deals will see UMWOG acquire Ekuinas’ 42.3% direct stake in listed Icon Offshore Bhd for new UMWOG shares while separately acquiring Ekuinas’ 95.5% stake in privately held Orkim Sdn Bhd for cash. These exercises will see Icon Offshore being taken private.

For more on the road ahead for UMW, get a copy of the Edge for the week of Feb 20 – Fen 26 available at newsstands now.

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