MBM Resources Q2 net profit falls 15.9%

by **Cals** Wed 20 Aug 2014, 01:03

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Tuesday, 19 August 2014 20:05

KUALA LUMPUR: MBM Resources Bhd’s net profit fell 15.9% to RM31.24 million or 7.99 sen per share for the second quarter ended June 30, 2014 (2QFY14), on lower revenue from its motor trading division and declining results from associates.

Revenue declined marginally by 1.4% to RM565.6 million, from RM573.6 million in 2QFY13, due to lower sales of Volkswagen marques and commercial vehicles, said the company.

However, improved sales of Perodua vehicles by its subsidiary, DMM Sales Sdn Bhd — which is the largest independent dealer for Perodua in the country, and overall higher after sales revenues, helped cushion this effect.

“Associates' results declined 18% to RM31.7 million, due to lower volumes and start up costs of new manufacturing facilities during the quarter,” it added.

Its associate companies include a 20% direct stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and 42% interest in Hino Motors Sales (M) Sdn Bhd.

According to MBM, operating profits — which improved by 4.6% to RM18.9 million — was mainly attributable to higher deliveries by its automotive parts manufacturing division, in line with higher production volumes from major car makers.

For the first half ended June 30, 2014, net profit came in 21.8% lower at RM54.66 million, from RM69.91 million in the previous corresponding period. Revenue stood at RM1.07 billion, 9.27% lower than RM1.18 billion in 1HFY13.

“The trading environment remains challenging due to factors affecting consumer purchases, such as tighter financing conditions for consumers,” said MBM, adding that the group is also experiencing the effect of startup costs of its new manufacturing investments in OMI Alloy and associates.

“However, we expect to reap the benefits of these investments, starting next year,” said MBM.

It added that the group's investment in expanding the after-sales servicing capacity will continue to contribute to higher operating margins.

MBM closed at RM2.88 today, 12.2% lower than RM3.28 in the begining of the year.