MBM 1Q net profit falls 29% on lower vehicle sales, start-up loss

by **Cals** Wed 21 May 2014, 01:52

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Tuesday, 20 May 2014 17:49

KUALA LUMPUR (May 20): MBM Resources Bhd's net profit fell 29% to RM23.4 million in the first quarter ended March 31, 2014 from RM32.8 million a year earlier. Profit fell mainly on lower vehicle sales, and start-up losses from new investments in manufacturing facilities.

In a statement to the exchange today, MBM said revenue fell to RM508.2 million from RM609.9 million. MBM owns 20% in Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

MBM said : "The overall lower performance was mainly attributed to lower vehicle sales and start-up losses from new investments in manufacturing facilities.

"However, the (automotive-component) manufacturing division recorded higher deliveries on the back of higher production volumes from major car makers. Associates' results were lower as the new manufacturing facilities incurred start-up costs during the quarter."

Looking ahead, MBM said the automotive-sales environment remained challenging on cautious buyer sentiment amid rising cost of living.

This comes at a time when hire-purchase financing is more stringent while interest rates have risen, hence, affecting demand, according to MBM.

"The start-up costs of the group's major investments in expanding its distribution network and manufacturing facilities are continuing to have an impact on the group's current profitability.

"However, these initiatives will strengthen the group's competitiveness in the market and the segments it represents," MBM said.