UMW Holdings Berhad. Beyond Boundaries. Corporate presentation. March 2019 UMW HOLDINGS BERHAD

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1 UMW Holdings Berhad Corporate presentation March 2019 Beyond Boundaries 1

2 INTRODUCTION

3 OUR JOURNEY Enhancing our capabilities Laying the building blocks for excellence Founded in 1917 Equipment Distribution Automotive Assembly Aerospace Bicycle repair shop >50 years with Komatsu >50 years with TICO >37 years with Toyota >26 years with Daihatsu Fan Case Manufacturer for Rolls-Royce Tier 1 supplier 3

4 OUR SHAREHOLDERS As at 28 February 2019 PNB Permodalan Nasional Berhad & PNB Managed Unit Trust Funds, 59.47% 59.47% RM6.8b EPF 28/02/2019 Foreign Shareholders Employees Provident Fund Board, 10.08% 10.08% Market Capitalisation Foreign Shareholders, 6.27% 6.27% 17.93% 6.25% Other Local Shareholders KWAP Other Local Shareholders, 17.93% Kumpulan Wang Persaraan (Diperbadankan), 6.25% 4

5 OVERVIEW OF OUR BUSINESSES Automotive Equipment M&E Others Manufacture Assembly Distribution Sales & service Distribution Trading Leasing After-sales service Manufacture of fan case Manufacture of automotive components Blending & distribution of lubricants Unlocking value of the land in Serendah 5

6 INTERNATIONAL PRESENCE 8 countries Myanmar Automotive Equipment Manufacturing & Engineering China 8,301 Employees AA2 RAM Credit Rating Brunei Vietnam Malaysia Papua New Guinea Singapore Indonesia 6

7 AUTOMOTIVE

8 UMW AUTOMOTIVE SEGMENT 51% 38% UMW Toyota Motor Sdn. Bhd.* Investment holding, importation and distribution of Toyota vehicles and related parts Perusahaan Otomobil Kedua Sdn. Bhd.** Investment holding and provision of management and administrative services 100% Perodua Sales Sdn. Bhd. Marketing and distribution of motor vehicles, related spare parts and other related activities 100% Assembly Services Sdn. Bhd. Assembler of vehicles 49% Perodua Auto Corporation Sdn. Bhd.*** 51% Investment holding and provision of management and administrative services 100% 65% 30% Automotive Industries Sdn. Bhd. Toyota Boshoku UMW Sdn. Bhd. UMW Toyotsu Motors Sdn. Bhd. 30% Toyota Capital Malaysia Sdn. Bhd. Manufacturer and supplier of exhaust systems Manufacturer of car seats, door trims, headlining, etc. Sales and service of Toyota and Lexus vehicles and parts Hire purchase financing of Toyota customers 49% 30% 49% 49% 51% 51% Perodua Manufacturing Sdn. Bhd. Perodua Global Manufacturing Sdn. Bhd. Perodua Engine Manufacturing Sdn. Bhd. Ingress Technologies Sdn. Bhd. Daihatsu Perodua Engine Manufacturing Sdn. Bhd. Manufacturer and assembler of motor vehicles and other related activities Manufacturer and assembler of motor vehicles and other related activities Manufacturer and dealer in component parts including engines, couplings and transmission components Manufacturer of complete door assemblies and press parts 49% 51% Daihatsu Motor Co., Ltd Manufacturer of engine and engine components for Energy Efficient Vehicles * 39% Toyota Motor Corporation 10% Toyota Tsusho Corporation ** 20% Daihatsu Motor Co., Ltd 20% MBM Resources Bhd 10% PNB Equity Resource Corporation Sdn Bhd 4.2% Mitsui & Co., Ltd 2.8% Mitsui & Co., ( Asia Pacific) Pte Ltd 5% Daihatsu (Malaysia) Sdn Bhd ****** 41% Daihatsu Motor Co., Ltd 6% Mitsui Co., Ltd 8 4% Mitsui & Co., ( Asia Pacific) Pte Ltd

9 TOTAL INDUSTRY VOLUME (TIV) 2019 target - 600,000 units (0.2% YoY) Unit sales % Growth Year-on-Year 700, , , , , , , , , , , , , % 12.7% 4.6% 4.5% 3.8% 1.6% 0.0% 30.0% 20.0% 10.0% 300, % -0.8% -0.6% 0.0% -10.0% 100, % -20.0% -100,000 Source: Malaysian Automotive Association % 2018 car sales saw a growth of 3.8% year-on-year with 598,714 units sold, exceeding MAA s revised target of 585,000 units. The 2018 TIV growth marks the end of two consecutive years of sales decline. Sales improved substantially during the three-month GST-free period. MAA is forecasting a flat TIV growth in 2019, with a sales target of 600,000 units. 9

UMW TOYOTA MOTOR (UMWT) UNIT SALES 2019 sales target - 75,000 Units (13% YoY) 150,000 110,000 70,000 30,000 18.6% 101,839 15.3% 15.2% 14.

1% 65,110 70,445 66,562 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.

0% Distributes 6 CKD and 8 CBU Toyota models. Lexus models are all CBU.

10 UMW TOYOTA MOTOR (UMWT) UNIT SALES 2019 sales target - 75,000 Units (13% YoY) 150, ,000 70,000 30, % 101, % 15.2% 14.8% 17.0% 14.1% 15.6% 14.4% 82,089 Unit sales 91,990 88, ,622 92,521 Market Share 103,636 95, % 12.2% 11.1% 65,110 70,445 66, % 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -10,000 Source: Malaysian Automotive Association % Distributes 6 CKD and 8 CBU Toyota models. Lexus models are all CBU. Importation of CBU cars and CKD components are transacted in US Dollar. All-new models launched in late 2018 Toyota Rush (October) and Toyota Camry (November). As a result of the run-out of Vios towards the end of 2018, UMWT sold 66,562 units during the year. Delivery of Rush started in Feb 2019 despite the launch in Oct

PERODUA UNIT SALES IN 2018 2019 sales target - 231,000 Units (2% YoY) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 30.5% 31.1% 31.2% 30.0% 30.1% 29.9% 29.

11 PERODUA UNIT SALES IN sales target - 231,000 Units (2% YoY) 350, , , , , ,000 50, % 31.1% 31.2% 30.0% 30.1% 29.9% 29.3% 167, ,736 Unit sales Market Share 32.0% 35.7% 35.5% 38.0% 188, , , , , , , , ,243 * 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0 Source: Malaysian Automotive Association Perodua exceeded its 2018 target with a record breaking sales of 227,243 units and maintained its No.1 position in overall market share for the 13th consecutive year. The all-new Myvi (launched in Nov 2017) was the best-selling model. Exporting to 6 countries - Indonesia, Singapore, Mauritius, Fiji, Sri Lanka and Brunei. Order taking for the new 7-seater SUV, Perodua Aruz started on 2 Jan 2019, with monthly sales target of 2,500 units. 0.0% 11

12 2018: UMW GROUP S MARKET SHARE Units & Market Share (%) , % 38.0% 11.1% Perodua 227,243 UMW Toyota 66, , % UMW Group sold 293,805 units in 2018 with a market share of 49.1% ( %) Other Carmakers Sales and Market Share Brand % Others 304, , % Honda Proton Nissan Mazda Others Units 102,282 64,744 28,610 16,038 93,235 Market Share % Units 109,511 70,991 27,154 9,730 75,676 Total TIV 598, ,635 Market Share % Source: Malaysian Automotive Association 12

13 EQUIPMENT

14 EQUIPMENT SEGMENT HEAVY INDUSTRIAL EQUIPMENT EQUIPMENT Material handling Marine & Power UMW represents all of the above principals for some of the world s most recognised products in: Agriculture Construction Forestry Mining Industrial and manufacturing Industrial cleaning food and beverage, material handling and logistics Industrial and marine power solutions 14

Heavy Equipment UMW Corporation (74%) Joint venture effective

Sdn Bhd Principal-distributorship relationship between UMW and

UMW and Komatsu begins Also distributes: Since 1965 Malaysia

15 Heavy Equipment UMW Corporation (74%) Joint venture effective 1 October 2018 Komatsu Ltd (26%) UMW Komatsu Heavy Equipment Sdn Bhd Principal-distributorship relationship between UMW and Komatsu began Oct Joint-venture agreement between UMW and Komatsu begins Also distributes: Since 1965 Malaysia Myanmar Singapore Papua New Guinea Brunei Since 1979 Since

Industrial Equipment Material Handling Toyota Forklift Franchise Since 1967 Malaysia Singapore Vietnam Brunei China : Shanghai, Zhejiang Strong market leadership position No.

Toyota Forklifts UMW is one of the Top 10 Distributors in the world.

16 Industrial Equipment Material Handling Toyota Forklift Franchise Since 1967 Malaysia Singapore Vietnam Brunei China : Shanghai, Zhejiang Strong market leadership position No. 1 position in Malaysia since Toyota forklift maintained its 50% market share in Malaysia s material handling equipment business. Toyota Forklifts UMW is one of the Top 10 Distributors in the world. Globally, UMW is the only Diamond member (the highest elite tier) in the Premier Club Recognition Programme, awarded by Toyota Material Handling International (TMHI). Also awarded the Undisputed Performance Award by Toyota Material Handling International for outstanding performance. Have ventured into leasing of Toyota forklifts. 16

17 Industrial Equipment Marine & Power Compressors Generators Marine engines Oil spill equipment 17

18 MANUFACTURING & ENGINEERING

MANUFACTURING & ENGINEERING SEGMENT Key Products Aerospace Component UMW is the largest distributor of Repsol lubricants outside Spain, mainly driven by strong sales in China Aero Engine Fan Cases

19 MANUFACTURING & ENGINEERING SEGMENT Key Products Aerospace Component UMW is the largest distributor of Repsol lubricants outside Spain, mainly driven by strong sales in China Aero Engine Fan Cases Lubricants Lubricants & Fluids Auto Components Shock Absorbers Automotive Components Lubricants & Fluids (China) Fluids & Chemicals Grantt lubricants, UMW s in-house brand was launched in 2015 Grantt lubricants are distributed in 9 countries, ie: Malaysia, Singapore, Brunei, the Philippines, Cambodia, Vietnam, Indonesia, Thailand and China. 19

MANUFACTURING & ENGINEERING SEGMENT Manufacture of Aero Engine Fan Cases UMW Aerospace Sdn Bhd Component Part Manufacturing for RR s Most Advanced Passenger Aircraft Engines UMW is the 1 st Malaysian

20 MANUFACTURING & ENGINEERING SEGMENT Manufacture of Aero Engine Fan Cases UMW Aerospace Sdn Bhd Component Part Manufacturing for RR s Most Advanced Passenger Aircraft Engines UMW is the 1 st Malaysian Tier 1 Supplier to Rolls- Royce The contract is for the manufacture of fan cases for the Trent 1000 aero engines for 25+5 years (Trent 7000 engines later) for Rolls-Royce. Both Trent engines are the most advanced in aero engine technology, with increased fuel efficiency and noise reduction. UMW will be the only supplier ( single-source supplier ) for fan cases for both the engines. The manufacturing plant is located in Serendah, Selangor. Part of Rolls-Royce s Asian Supply Chain Single Source Final Assembly of the Trent 1000 and Trent 7000 engines in Singapore Successfully delivered the first fan case on 29 November Started generating revenue in Ramp-up production. 20

21 2018 FINANCIAL PERFORMANCE

22 CORE SEGMENTS CONTINUED TO DELIVER HEALTHY RESULTS IN 2018 RM m RM446m RM545m Combined total PBT 2018: RM719m 2017: RM571m 25.9% RM143m RM152m -RM18m RM22m Automotive Equipment M&E 22

23 PATAMI FROM CONTINUING OPERATIONS SURGED IN 2018 (RM m) FY17 FY18 Net profit from Continuing Operations Attributable to perpetual sukuk holders Attributable to noncontrolling shareholders PATAMI from Continuing Operations Losses from Discontinued operations (35.4) (109.6) (117.7) (675.9) (148.9) Consolidated PATAMI (640.6)

24 DISCONTINUED OPERATIONS Unlisted Oil & Gas segment - carrying value RM 33m Associates & JVs Remaining carrying value for investments in associates and joint ventures We do not expect any adverse material impact to the Group RM 19m Subsidiaries Remaining carrying value for subsidiaries We do not expect any adverse material impact to the Group Out of 16 companies, only 6 are remaining Active negotiations are on-going to divest/liquidate the remaining companies 24

25 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2018 DEPOSITS, CASH & BANK BALANCES RM1.3 billion TOTAL EQUITY RM5.7 billion 50% Debt-to-equity ratio LONG-TERM BORROWINGS RM2.3 billion SHORT-TERM BORROWINGS RM535 million Net Debt-toequity ratio 27% 25

26 HISTORICAL PERFORMANCE

27 SELECTED GROUP FINANCIAL HIGHLIGHTS 1 2 Revenue (RM million) PATAMI (RM million) 15,817 14,933 14,442 12,770 12,820 13,536 13,952 10,721 10,437 11,06711, (37) (641) (1,658) 3 Gross Dividend Per Share of RM0.50 each (sen) 4 Dividend Payout Ratio (%) > March 08 Share Split from RM1.00 to RM0.50 each *2018 figures are unaudited 27

28 2019 AND BEYOND

29 OUR TRANSFORMATION STRATEGY 7 Strategic Pillars of Transformation Framework TRANSFORMATION STRATEGY Capstone for strategic planning at UMW 7 Strategic Pillars Rationalise non strategic assets Unlock value of non productive assets Digitise & Digitalise Revenue Elevation Innovation Platform Cost Optimisation & Synergy Human Capital Strategic Support Objectives 1. To focus and expand on the Group s core businesses 2. To pursue sustainable growth strategies 3. To unlock value of the Group s assets for further value creation 29

30 AUTOMOTIVE STRATEGY UMW TOYOTA MOTOR To regain No. 1 position in non-national segment Strategy Increase localisation to improve cost and pricing competitiveness Expand CKD model offering, including EEV models Second plant - Bukit Raja, Klang Boost capacity and capability High automation Plant & land size - 670,000 m² 2.6x bigger than the Shah Alam plant Annual capacity 50,000 units on 1-shift operations Increase localisation. The all-new Vios has more than 80% local content (previously 58%) Total Investment RM1.8 billion Commenced operations in January 2019 with the production of the all-new Toyota Vios 30

AUTOMOTIVE SEGMENT TOYOTA NEW MODEL OFFERINGS IN

2018, fullyear contribution in 2019 TOYOTA VIOS

2019 TOYOTA C-HR The model update was introduced in

TARGET 75,000 units Produced from the new Bukit

31 AUTOMOTIVE SEGMENT TOYOTA NEW MODEL OFFERINGS IN 2019 TO BOOST SALES TOYOTA CAMRY Launched in Nov 2018, fullyear contribution in 2019 TOYOTA VIOS Launched in Jan 2019; target 30,000 unit sales in 2019 TOYOTA C-HR The model update was introduced in Jan 2019 TOYOTA YARIS To be launched in 2Q TARGET 75,000 units Produced from the new Bukit Raja plant Volume-driven models to increase sales and market share 31

segments at an affordable price Perodua Aruz caters to the popular SUV-segment 2019

32 AUTOMOTIVE STRATEGY PERODUA Defend leading position in the Malaysian automotive market Strategy Improve model offering for the entry-level market To offer models in popular segments at an affordable price Perodua Aruz caters to the popular SUV-segment 2019 TARGET 231,000 units PERODUA ARUZ Launched in Jan 2019; target 30,000 unit sales in

EQUIPMENT STRATEGY Moving to strategic partnership and innovate new value-added solutions and services to complement product range Heavy Equipment 14 JAN 2019 - UMW Launches New Komatsu Hi-efficiency

solutions to construction job sites Provision of value-added services through competitive product pricing, forex and financing assistance Enhancement in rental/leasing business Expansion in existing

33 EQUIPMENT STRATEGY Moving to strategic partnership and innovate new value-added solutions and services to complement product range Heavy Equipment 14 JAN UMW Launches New Komatsu Hi-efficiency Excavator Model PC210-10M0 in Malaysia Leveraging on our partnership with Komatsu Introduction of more products/models to cater to urbanisation sector Opportunity to introduce SMARTCONSTRUCTION: ICT solutions to construction job sites Provision of value-added services through competitive product pricing, forex and financing assistance Enhancement in rental/leasing business Expansion in existing markets, ie: Myanmar UMW (74%) Komatsu Ltd JV officially took (26%) effect 1 Oct 2018 UMW Komatsu Heavy Equipment Sdn Bhd The entire heavy equipment business is parked under the JV, with the following brands distributed in its respective existing markets Since 1965 Since

EQUIPMENT STRATEGY Moving to strategic partnership and innovate new value-added solutions and services to complement product range Diversifying and expanding product and service offering in growth

34 EQUIPMENT STRATEGY Moving to strategic partnership and innovate new value-added solutions and services to complement product range Diversifying and expanding product and service offering in growth markets, i.e. Vietnam Provide improved after-sales services To explore new opportunities in various customer segments Industrial Equipment Leveraging on Internet of Things (IoT) to enhance service and product offering Expanding fleet management / rental business 34

35 M&E STRATEGY Further expansion into high-value / advanced manufacturing To expand automotive components business Improve synergies with UMWT and Perodua in its efforts to increase localisation Increase sales for OEM and REM in both domestic and foreign markets, from continued expansion of products and services KYB-UMW to commence plant modernisation initiatives to cater to increasing demand Strategy Explore opportunities in the HVM space Optimising our aerospace manufacturing capabilities Diversify into non-aerospace related projects To improve margins Higher automation to optimize operations Material cost reduction with vendors and global sourcing Lean organization structure and processes to drive efficiency 35

MONETISING OUR LAND ASSETS SERENDAH LAND 861 acres Will be developed into a High Value Manufacturing Park by clusters Signed an MoU with MIDA and Invest Selangor to collaborate on the park s

36 MONETISING OUR LAND ASSETS SERENDAH LAND 861 acres Will be developed into a High Value Manufacturing Park by clusters Signed an MoU with MIDA and Invest Selangor to collaborate on the park s development to attract potential tenants Continuously working with MATRADE UMW Aerospace s engine fan case manufacturing facility is the pioneer tenant taking up 24 acres Several other tenants, including T7 Global took up 7 acres of land UMW s operations in Shah Alam to move to Serendah within the next few years There have been strong interest with several deals in the pipeline 36

37 UMW Group Our goals SHORT- TO MID-TERM Continued expansion of our core business segments by venturing into new markets, diversifying product mix and ancillary businesses Automotive Equipment M&E UMWT To regain No. 1 position in non-national segment Perodua to defend leading position in the Malaysian automotive market Expand and innovate new value-added solutions and services to complement product range Evolve relationship with Principals from Distributor to Strategic Partner Further expansion in highvalue / advanced manufacturing portfolio Expansion of auto components business Continued margin improvements via business optimisation initiatives Unlock value of the Group s assets LONG-TERM Pursuing industrial innovation in order to generate our own products and services Balanced portfolio in terms of earnings contribution between Automotive and non- Automotive segments 37

THANK YOU Roza Shahnaz Omar Director, Group Strategy UMW Corporation Sdn. Bhd. S. Vikneshwaran Head, Investor, Media Relations & Sustainability Email: vikneshwaran.

The information contained herein is not to be distributed without the consent of UMW Holdings Berhad.

38 THANK YOU Roza Shahnaz Omar Director, Group Strategy UMW Corporation Sdn. Bhd. S. Vikneshwaran Head, Investor, Media Relations & Sustainability Telephone: Corporate Portal This material is proprietary and is prepared specifically for the recipient s reference. The information contained herein is not to be distributed without the consent of UMW Holdings Berhad. Any recommendation or views contained in this document do not have regard to specific investment objectives, financial situation and the particular needs of any specific audience. The content furthermore is believed to be correct at the time of the issue of this document, and is not and should not be construed as an offer or a solicitation of any offer to buy or sell any securities. Nor does this document purport to contain all the information a prospective investor may require.

UMW Holdings Berhad Corporate Presentation

UMW Holdings Berhad Corporate Presentation January 2019 1 Introduction 2 OUR JOURNEY Enhancing our capabilities Laying the building blocks for excellence Founded in 1917 Equipment Distribution Automotive