KUALA LUMPUR (Jan 19): Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is expected to deliver a lower dividend payout this year as it recorded lower earnings due to a drop in vehicle sales.

Its president and chief executive officer Datuk Dr Aminar Rashid Salleh said while 2017 sales of 204,900 units surpassed the car maker's target of 202,000 units, the figure was 1.06% lower than the 207,100 recorded in 2016 amid challenging market conditions, intense competition and strict hire purchase guidelines.

He said last year's sales came from the momentum carried by its first sedan model Bezza in the earlier part of 2017 and the continued demand for its other models, which have helped make the company the top-selling car maker in Malaysia for the 12th year running.

"I have to admit, yes, there is an impact on our bottom line, but what is important is that we are still able to make profits and we will still recommend a dividend at the forthcoming AGM (annual general meeting). However, we have not decided on the payout ratio," he told a news conference today.

"There may be a bit of a decline (in profits), but we were able to mitigate it because towards the end of the year (2017) the ringgit strengthened and that helped us. In addition, there are early signs of robust sales for the Myvi 1.5-litre engine variant which has given us higher profits than the 1.3-litre engine variant," he added.

Perodua's shareholders are UMW Holdings Bhd (38%), MBM Resources Bhd (20%), Daihatsu Motor Co Ltd (20%), PNB Equity Resource Corp Sdn Bhd (10%), Daihatsu (Malaysia) Sdn Bhd (5%), Mitsui & Co Ltd (4.2%) and Mitsui & Co (Asia Pacific) Pte Ltd (2.8%).

For FY16, UMW Holdings disclosed that dividends received from Perodua was RM78.26 million, which was 20.01% lower than RM97.84 million the group received in FY15.

MBM Resources did not give a breakdown of the dividends received from associates.

According to UMW Holdings' FY16 annual report, Perodua recorded a profit of RM463.59 million, up 7.7% from RM430.37 million in FY15, despite revenue declining 1.01% to RM9.05 billion from RM9.14 billion over the same period.

Earlier at the presentation, Aminar said Perodua is aiming for sales of 209,000 vehicles this year, 2% higher than the 204,900 vehicles sales registered in 2017, mainly driven by continued strong demand for its current model line-up.

"We hope to sustain a market share of 35%. This is based on our internal calculations where we expect the total industry volume to increase to 590,000 units in 2018. But we still got to wait for MAA's (Malaysian Automotive Association) forecast," he said.

Aminar conceded that some of the industry challenges for Perodua in 2018 include the increasing adoption of public transport, stringent bank financing and currency fluctuations.

"A strengthening ringgit is good for our imports, but not so good for our exports. The good thing is at this point we are not exporting in large volumes — about 4,000 to 5,000 units. Our exports are still on a learning curve; there is still a lot more that we need to do.

"Last year was a challenging year for us. This year the challenge is still forex (foreign exchange), so if we were to export more, it is going to hit our bottom line," he explained.

"Having said that, we just launched the new Myvi; hopefully, it will find its way to some of our existing export countries. At the same time we are exploring other opportunities, but it will not be that big and too soon. Let us continue to learn and understand that business," he added.

Since November last year, Aminar said Perodua has received 36,000 orders for the new Myvi, 85% of which are for 1.5-litre engine variant, and the remaining for the 1.3-litre engine variant.

He added that the increase in demand this year will also have a positive impact on vehicle production with an estimated 215,334 units to be produced at both its manufacturing facilities this year compared with 200,146 units produced in 2017.

Aminar said all of Perodua's after-sales businesses have shown positive growth last year as the demand for reliable and quality service increased due to better awareness amongst customers.

Perodua's intake growth has been positive in 2017, with the company expecting its service intakes to grow by 1.9% to 2.14 million in 2018, from 2.1 million intakes in 2017.

"While we look to further increase our sales this year, we are also aggressively growing our after-sales business to meet with the expected increase in the number of customers moving forward. This will be done by upgrading current facilities to have more bays and by further improving our people's competencies.

"This will further reduce our customers' waiting time while at the same time increase intakes," he said.

At 3:19pm today, UMW Holdings' share price fell six sen or 0.87% to RM6.84, with a market capitalisation of RM7.99 billion, while MBM Resources gained one sen or 0.42% to trade at RM2.39, valuing the group at RM918.59 million.