UMW Achieves Pretax Profit of RM414 million in 3Q11

Shah Alam, 24 Nov 2011 – The UMW Group announced today that its Group revenue of RM3,691.4 million for the third quarter ended 30th September 2011 exceeded the RM3,087.3 million recorded in the preceding year’s corresponding quarter by RM604.1 million or 19.6%.Higher revenue from all four core business segments contributed to the increase. Swift production recovery from the impact of earthquake and tsunami in Japan had enabled its Automotive and Equipment segments to register a surge in revenue. Full-quarter revenue generated by its premium jack-up rigs, Naga 2 and Naga 3 coupled with the higher day-rate from its semi-submersible rig, Naga 1, contributed to the higher revenue in the Oil & Gas segment.

Consequently, Group profit before taxation for the third quarter ended 30th September 2011 improved from the RM340.9 million registered in the same quarter of 2010 to RM414.2 million, an increase of 21.5% or RM73.3 million. Higher sales of both Toyota and Perodua vehicles and favourable exchange rate for the United States Dollar resulted in the higher profit contributions from the Automotive segment.Group revenue of RM10,079.1 million for the nine months ended 30th September 2011 surpassed the RM9,402.5 million registered in the same period of 2010 by RM676.6 million or 7.2%. Additional revenue contributions from the three offshore rigs, Naga 1, Naga 2 and Naga 3 coupled with strong demand for heavy and industrial equipment, mainly contributed to the higher revenue.

Despite the higher revenue, Group profit before taxation for the nine months ended 30th September 2011 declined marginally to RM1,065.7 million from the RM1,088.3 million recorded in the same period of 2010, a decrease of RM22.6 million or 2.1%. Substantial increase in the cost of base oil and the fact that its newly-completed plants overseas are still in the initial stages of operations below breakeven capacity, resulted in the lower profit contributions from the Manufacturing and Engineering segment.

Total sales of Toyota and Perodua vehicles of 198,950 units represented 44.2% of the total industry volume of 450,244 units reported by the Malaysian Automotive Association for the nine months ended 30 September 2011.

Moving forward

The flooding in Thailand has not directly affected any of the three Toyota vehicle production plants located in Samrong, Ban Pho and Gateway. However, vehicle production has been halted since 10th October 2011 due to disruptions in the supply of critical parts by suppliers in Thailand affected by the flooding. Toyota is doing everything possible within its capability to restore procurement as soon as possible. This includes procuring substitute parts from affiliates in other countries and carrying out countermeasures on a daily basis. Toyota resumed its plant operations in Thailand on 21st November 2011.

UMW Toyota anticipates a temporary lower-than-normal stock level in the last two months of the year as a result of the floods in Thailand. However, UMW Toyota is doing its utmost to minimise delivery disruptions to its customers. The flooding in Thailand has no impact on the production of Perodua vehicles. Despite the challenges above, the Automotive segment is expected to achieve its internal revenue and profit targets set for 2011.

Demand for heavy and industrial equipment is expected to be maintained in the fourth quarter of 2011. However, provision for potential losses for a heavy equipment maintenance contract is expected to affect the profit contributions from the Equipment segment for the fourth quarter of 2011.Performance of the Group’s Manufacturing and Engineering segment is expected to be sustained in the fourth quarter of 2011, as impact from the flooding in Thailand is very minimal. However, on the whole, this segment is expected to underperform from its internal revenue and profit targets set for the year 2011 due to the general market slow-down and more costly raw materials.

With the three rigs, Naga 1, Naga 2 and Naga 3, fully operational, operating results of the Oil and Gas segment is expected to improve further in the remaining quarter of 2011. However, any further unfavourable movement in fair value of the investment segments quoted overseas and hedging instruments at year-end will affect the overall performance of the Oil and Gas segment for the year 2011.

The Board is of the view that the Group’s internal targets for 2011 are achievable.

The Board declared a second interim single-tier dividend of 27% or 13.5 sen (2010 -27% or 13.5 sen) per share of RM0.50 each, amounting to a net dividend payable of approximately RM157.7 million (2010 – RM156.6 million) for the year ending 31st December 2011, to be paid on 10th February 2012.





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