CEO Morning Brief

UMW's 3Q Net Profit Jumps 72% on Sustained Demand Across All Business Segments

Publish date: Tue, 28 Nov 2023, 08:38 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 27): UMW Holdings Bhd's net profit for the third quarter ended Sept 30, 2023 (3QFY2023) jumped 71.91% to RM173.11 million from RM100.70 million a year ago, as it recorded higher revenue with improved contributions from all its businesses, driven by sustained demand.

The conglomerate’s quarterly revenue rose 18.97% to RM4.83 billion from RM4.06 billion, with its automotive segment — its largest contributor — showing a 17.4% increase in revenue to RM4.02 billion, its bourse filing showed. At the same time, its equipment segment's topline rose 14.6% to RM451.95 million, and its manufacturing and engineering business posted a 44.3% revenue jump to RM363.81 million from RM252.17 million previously.

For the nine months ended Sept 30, the group’s net profit came up to RM611.12 million, almost double the RM309.09 million it made in the corresponding period last year, as it recorded a one-off RM218.1 million disposal gain on the sale of its 140-acre land in Serendah, and stronger revenue — which grew 19.75% to RM13.70 billion from RM11.44 billion, as all its businesses saw improved toplines.

Moving forward, the group expects its automotive segment's sales to continue to perform well in the last quarter of FY2023, as it expects the demand for vehicles to remain strong, supported by high industry order backlog. "The sales momentum will be further supported by the year-end sales promotions as well as new model launches. The improving supply chain has led to higher vehicle production, thus reducing the delivery lead-time to customers. This is also expected to help drive sales of new vehicles," it said.

At the same time, it said outlook for its equipment continues to remain favourable, though the last quarter of FY2023 is expected to be softer than the prior quarters.

"The heavy equipment sub-segment continues to exhibit strength, primarily driven by the increased demand in the mining sector in Papua New Guinea and the plantation sector in Malaysia. Furthermore, the ongoing infrastructure projects in Malaysia, Singapore, and Papua New Guinea are expected to contribute positively to this sub-segment. Nevertheless, the sub-segment remains vigilant on the potential impact of the ongoing political uncertainties in Myanmar," the group noted.

As for its manufacturing and engineering business, the group said the auto components and lubricants sub-segments are expected to benefit from the sustained demand in the original equipment market, in line with the expected higher demand for new vehicles in the last quarter of the year.

Overall, the group expects to deliver a "satisfactory performance for the year".

Shares in UMW dipped one sen or 0.2% to close at RM4.90 on Monday, giving the group a market capitalisation of RM4.90 billion. Year to date, the stock has climbed 42.03%.

Source: TheEdge - 28 Nov 2023

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