KUALA LUMPUR (Aug 23): MBM Resources Bhd’s second quarter net profit fell 29.88% to RM51.93 million, from RM74.06 million a year before, amid a lower contribution from its motor trading, auto parts manufacturing, and share of results of associates.

Earnings per share for the quarter ended June 30, 2023 (2QFY2023) declined to 13.29 sen, from 18.94 sen previously.

Revenue sank 3.13% to RM539.57 million from RM557.02 million in 2QFY2022, the group’s bourse filing showed.

Despite the weaker quarterly results, the group has declared a first interim dividend of six sen per share and a special dividend of 20 sen per share, both payable on Sept 22.

MBM said its motor division posted a profit before tax (PBT) of RM10.29 million in 2QFY2023, down 40.06% compared with the RM17.17 million recorded a year earlier. The segment’s revenue fell 3.2% to RM470 million from RM485.4 million.

The group said the division’s weaker performance was due to the passenger vehicle sales coming off the high demand experienced during the sales and service tax (SST) exemption period last year. Commercial vehicles’ volume too declined as fleet customers remained cautious with their procurement plan, in view of the uncertainties ahead in 2023.

The SST exemption, which ended on June 30 last year, involves a 100% waiver for locally assembled or completely-knocked-down (CKD) passenger cars, and 50% for imported or completely-built-up (CBU) passenger cars.

MBM’s auto parts manufacturing segment’s PBT dropped 45.9% to RM2.62 million, from RM4.94 million in 2QFY2022, mainly due to some lump sum costs recovery claims from vendors and higher operating costs such as wages and machine maintenance expenses. The segment’s revenue fell 3% to RM68.9 million from RM71.06 million, due to the model mix changes.

The group’s share of associates’ earnings retracted by 16.8% to RM45.2 million from RM54.34 million previously, mainly due to higher operating costs, in line with higher production and sales volume.

For the first six months of FY2023, MBM’s net profit fell 19.26% to RM131.88 million from RM163.34 million in the same period of FY2022, despite revenue rising 5.78% to RM1.1 billion from RM1.04 billion.

On prospects, MBM Resources foresees the demand in the automotive industry to be mainly driven by high bookings collected for new models introduced, including electric vehicles, improvement in the supply chain environment and aggressive promotional strategies.

“In addition, Perodua’s strong order bank is also expected to sustain the group for the near term.

“Despite the mixed outlook, we will continue to be vigilant in cost management and to drive operational efficiency to remain competitive, as well as to improve revenue streams through variation in sales and service offerings to different market segments,” it added.

MBM shares closed unchanged at RM3.69 on Wednesday (Aug 23), bringing the group a market capitalisation of RM1.44 billion.