UMW’s earnings drop 56% despite higher turnover in 4Q

KUALA LUMPUR (Feb 27): Industrial conglomerate UMW Holdings Bhd’s net profit sank 55.8% to RM105.95 million in the fourth quarter ended Dec 31, 2022 (4QFY2022) from RM239.96 million in the previous year’s corresponding quarter, owing to the lower share of profit from an associated company.

As a result, its earnings per share declined to 9.07 sen in 4QFY2022, down from 20.54 sen a year ago, the group's filing with Bursa Malaysia on Monday (Feb 27) showed.

UMW’s revenue, however, grew 20% to RM4.37 billion in 4QFY2022, up from RM3.64 billion a year before, mainly due to higher contribution from all segments, driven by contributed strong growth momentum post Covid-19 pandemic.

The diversified group declared a final dividend of 11.2 sen per share — amounting to RM130.8 million — payable on May 12. This brings the cumulative dividend payout for FY2022 to 14.2 sen compared with 5.8 sen in FY2021.

On the breakdown of UMW’s segmental performance, its automotive segment’s revenue increased by 20.7% to RM3.69 billion from RM3.06 billion, boosted by a higher number of vehicles sold in the quarter under review. Conversely, profit before zakat and taxation (PBZT) dropped 32.1% to RM182.64 million from RM269.16 million due to the lower share of profit from an associated company.

The equipment segment’s revenue of RM395.29 million in 4QFY2022 was 8.3% higher than the RM365.13 million reported in the previous year, driven by stronger demand for the segment’s products and services in the local and overseas markets. Accordingly, PBZT grew 23.2% to RM35.65 million from RM28.94 million.

Meanwhile, the manufacturing and engineering segment reported a 23.3% increase in revenue to RM278.5 million from RM225.88 million, mainly attributable to the higher contribution from all sub-segments as the economic conditions improved both locally and regionally. PBZT more than doubled to RM29.2 million from RM11.68 million.

For FY2022, UMW’s net profit jumped 54.7% to RM415.05 million from RM268.23 million as revenue climbed 43% to RM15.81 billion from RM11.06 billion.

On prospects, UMW said it will continue to focus on strengthening its core businesses through operational efficiency and cost management initiatives to improve its business resilience amidst the challenging business environment in 2023.

It noted that the total industry volume is expected to fall to 650,000 units in 2023, against a record high of 720,658 units in 2022 following the end of the sales tax exemption for those outstanding orders to be registered by March 31, coupled with the projected slowdown of the global economy and ongoing supply chain issues faced by automotive industry.

“The group will continue to take the necessary measures to mitigate the projected slowdown through increased production to fulfil its outstanding bookings as well as with the introduction of exciting new and facelifted models to entice and sustain buying interest among consumers. The group believes that the automotive industry will continue to perform well in 2023,” added UMW.

UMW’s share price closed five sen or 1.3% higher at RM3.95 on Monday, with a market value of RM4.61 billion.