UMW to expand into 3 Asean countries

by **Cals** Tue 26 Nov 2013, 16:23

Business & Markets 2013

Written by Madiha Fuad of theedgemalaysia.com

Tuesday, 26 November 2013 10:29

KUALA LUMPUR: UMW Holdings Bhd aims to capitalise on the Asean Economic Community (AEC) by entering the Philippines, Laos and Cambodia by next year to expand its presence in Asean.

“We are planning to capitalise on this [AEC] when Asean becomes a single market in 2015 and we are confident that we are able to strengthen our position as we move along,” UMW president and group CEO Datuk Syed Hisham Syed Wazir said at a media briefing yesterday.

He said that the group is currently based in seven countries in Asean and is planning to expand its operations in the three countries by next year.

“By next year we will be investing in 10 of the Asean countries and we are confident that the investments will give us returns,” he said.

Syed Hisham added that UMW plans to venture into various business segments and take on any business opportunities that would contribute positively to the group.

Sitting on a net cash pile of about RM2.1 billion as at end of Sept 30, UMW is in a healthy position to fund its expansion.

“It’s one of the best options that we have to move forward and we also plan to do this through organic and inorganic growth,” he said.

As the group is focusing on businesses that are recurring and sustainable, Syed Hisham said the equipment and automotive component business would be the next area of growth for UMW.

“The equipment and automotive business is among the divisions that are active and we are confident that it will grow next year,” he said.

As the group sees room for more expansion in the automotive as well as manufacturing and engineering (M&E) segments, it has started exploring business opportunities in the Indonesian market.

He pointed out that this year the group had made inroads into the Indonesian automotive sector through a joint venture (JV) with the Bluebird Group in May.

UMW M&E will hold 49% of the JV, while Bluebird will hold the rest.

“They are one of the biggest players in the taxi business in Jakarta, owning 39,000 units of taxis. On our part, we are planning to combine and work on components and lubricants,” said Syed Hisham.

Going forward, he said he is confident that the group will perform well, despite posting a lower net profit for its third quarter ended Sept 30, 2013.

In a filing with Bursa Malaysia last Thursday, the group said net profit fell 66% to RM101.5 million from RM299.1 million in the previous corresponding period. Revenue also dropped to RM3.5 billion from RM4 billion.

He said the decrease in net profit was mainly due to its India operations and the depreciation of the rupee.

Nevertheless, Syed Hisham is of the view that the group will perform well as it will be boosted by the launch of the new Vios model next year, for which it expects to see orders of about 36,000.

This article first appeared in The Edge Financial Daily, on November 26, 2013.