This article first appeared in The Edge Financial Daily on August 28, 2019

KUALA LUMPUR: UMW Holdings Bhd reported yesterday a 32% fall in net profit to RM84.189 million for the second quarter ended June 30, 2019 (2QFY19), from RM124.38 million a year earlier, as the group recorded a one-off provision reversal for the previous year. Quarterly revenue rose 2% to RM2.97 billion from RM2.92 billion in the previous corresponding quarter.

“The increase in revenue was mainly due to higher sales of the automotive and manufacturing and engineering segments,” said the group. Meanwhile, the lower profit for the quarter was attributed to a one-off reversal of provisions amounting to RM207 million, which was recorded for the previous year.

“Excluding the corresponding quarter’s reversal of provisions, this quarter’s profit of RM179.1 million was higher than the RM110.7 million for the [previous] corresponding quarter,” it said. The group’s automotive segment saw a better performance amid a higher share of profit from an associated company, following higher vehicle sales made in the quarter. For the first half of the financial year, its net profit stood at RM170.69 million, 14% lower than the RM198.46 million in the same period a year earlier. Cumulative revenue increased 8% to RM5.74 billion from RM5.33 billion previously.

Going forward, the group expects sales of its automotive segment to remain stable as it has new models lined up with competitive pricing, along with the recent reduction in banks’ base lending rates.

The equipment segment is anticipated to see higher demand given the revival of major infrastructure projects by the government.

“In addition, the expansion in the overseas market is expected to contribute to higher sales for the second half of this year. Productivity improvements and cost management initiatives will help to cushion the impact from rising market competition,” it said.