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 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
OUR SHAREHOLDERS As at 31 December 2018 PNB Permodalan Nasional Berhad & PNB Managed Unit Trust Funds, 58.94% 58.94% RM 6.4b EPF 31/12/2018 Foreign Shareholders Employees Provident Fund Board, 11.06% 11.06% Market Capitalisation Foreign Shareholders, 6.53% 6.53% 16.40% 7.07% Other Local Shareholders KWAP Other Local Shareholders, 16.40% Kumpulan Wang Persaraan (Diperbadankan), 7.07% 4
OVERVIEW OF OUR BUSINESSES Automotive Equipment M&E Others Manufacture Assembly Distribution Sales & service Distribution Trading Leasing After-sales service Blending & distribution of lubricants Manufacture of automotive components UMW Land Sdn Bhd unlocking value of the land in Serendah Manufacture of fan case 5
INTERNATIONAL PRESENCE 8 countries Myanmar Automotive Equipment Manufacturing & Engineering Oil & Gas China 8,301 Employees AA2 RAM Credit Rating India Vietnam Malaysia Papua New Guinea Singapore Indonesia 6
Automotive 7
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
TOTAL INDUSTRY VOLUME (TIV) 2019 target - 600,000 units Unit sales % Growth Year-on-Year 700,000 500,000 605,156 600,123 627,753 655,793 666,465 666,674 580,124 576,625 598,714 548,115 536,905 12.5% 12.7% 4.6% 4.5% 3.8% 1.6% 0.0% 30.0% 20.0% 10.0% 300,000-2.0% -0.8% -0.6% 0.0% -10.0% 100,000-13.0% -20.0% -100,000 Source: Malaysian Automotive Association 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018-30.0% 2018 car sales saw a growth of 3.8% year-on-year with 598,714 units sold, exceeding MAA s target of 585,000 units. MAA had revised its TIV forecast from its initial 590,000 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 150,000 110,000 70,000 30,000 18.6% 101,839 15.3% 15.2% 14.8% 17.0% 14.1% 15.6% 14.4% 82,089 Unit sales 91,990 88,662 106,622 92,521 Market Share 103,636 95,861 11.2% 12.2% 11.1% 65,110 70,445 66,562 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -10,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Malaysian Automotive Association -20.0% 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 2018 Toyota Harrier (January), Toyota C-HR (March), Lexus LS 500 (March), Toyota Rush (October), Toyota Camry (November). As a result of the run-out of Vios and Camry towards the end of 2018, UMWT sold 66,562 units during the year. Delivery of Rush has not started. 10
AUTOMOTIVE STRATEGY - TOYOTA To regain No. 1 position in non-national segment Value Drivers Boost capacity and capability More exciting new CKD models Increase local content Competitive pricing Meeting market expectations on EEV o Second plant located in Bukit Raja, Klang o Strategic location near first plant and port o High automation o Focus on passenger vehicles and EEV segment o Increase localisation o Plant & land size - 670,000 m² 2.6x bigger than the Shah Alam plant o Total Investment RM1.8 billion o Annual Capacity - 50,000 units (initial) on 1- shift operations o Commenced operations in January 2019 with the production of the all-new Toyota Vios 11
PERODUA UNIT SALES IN 2018 2019 sales target - 231,000 Units 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% 29.3% 167,393 166,736 Unit sales Market Share 32.0% 35.7% 35.5% 38.0% 188,641 179,989 189,137 196,071 195,579 213,307 207,110 204,887 227,243 * 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 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 13th consecutive year. The allnew 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% 12
2018: UMW GROUP S MARKET SHARE Units & Market Share (%) 2017 204,887 35.5% 38.0% 11.1% Perodua 227,243 UMW Toyota 66,562 2017 70,445 12.2% UMW Group sold 293,805 units in 2018 with a market share of 49.1% (2017 47.7%) Other Carmakers Sales and Market Share Brand 2018 2017 50.9% Others 304,909 2017 301,303 52.3% Honda Proton Nissan Mazda Others Units 102,282 64,744 28,610 16,038 93,235 Market Share % 17.1 10.8 4.8 2.7 15.6 Units 109,511 70,991 27,154 9,730 75,676 Total TIV 598,714 576,635 Market Share % 19.0 12.3 4.7 1.7 13.1 Source: Malaysian Automotive Association 13
AUTOMOTIVE SEGMENT Financial Highlights 9M17 RM292m PBT +43.7% 9M18 RM420m Malaysia 45% PBT Higher contribution from Perodua Relatively strong Ringgit against USD 14
Equipment 15
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 16
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 2018 1965 Joint-venture agreement between UMW and Komatsu begins Also distributes: Since 1965 Malaysia Myanmar Singapore Papua New Guinea Brunei Since 1979 Since 1996 17
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 1972. 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. 18
Industrial Equipment Marine & Power CompAir Air Compressor Honda Power Products Mitsubishi Marine Engines Ingersoll Rand Centrifugal Compressor Mitsubishi Gen-sets GE Reciprocating Compressor 19
EQUIPMENT SEGMENT 9M2018 Financial Highlights Industrial Equipment 60% Industrial Equipment 63% Revenue breakdown PBT breakdown Heavy Equipment 40% Heavy Equipment 37% Myanmar 38% PNG 16% Malaysia 46% Vietnam 11% Singapore 36% China 3% Malaysia 50% 20
Manufacturing & Engineering 21
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 & Power Steering 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. 22
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 2017. Started generating revenue in 2018. 2019 - Ramp-up production. 23
MANUFACTURING & ENGINEERING SEGMENT 9M2018 Financial Highlights 9M 2018 M&E PBT* breakdown * excluding aerospace business Lubricants 34% The M&E segment recorded a profit before taxation of RM12.2 million mainly as a result of narrowing losses from the aerospace business. Malaysia We expect the aerospace 45% business to be profitable in 2020. PBT* breakdown Auto components 66% 24
9M2018 Financial Performance 25
9M 2018 CONSOLIDATED FINANCIAL RESULTS (RM 000) 9M18 9M17 % YoY Revenue 8,688,671 8,400,182 3.4 Associate s profit 169,250 113,422 49.2 Profit Before Taxation 518,814 (155,175) >+100 PATAMI 326,590 (218,504) >+100 In 1Q 2018, the Company declared a single-tier dividend of 5 sen per share for the financial year ending December 2018, paid on 21 June 2018 Equipment 13% M&E 7% SEGMENTAL BREAKDOWN OF CORE BUSINESSES 9M 2018 Revenue contribution Equipment 23% M&E 2% 9M 2018 PBT contribution Automotive 80% Automotive 75% 26
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2018 DEPOSITS, CASH & BANK BALANCES RM1.1 billion TOTAL EQUITY RM5.6 billion 55% Debt-to-equity ratio LONG-TERM BORROWINGS RM2.3 billion SHORT-TERM BORROWINGS RM747 million Net Debt-toequity ratio 32% 27
REMAINDER OF THE UNLISTED OIL & GAS SEGMENT Companies No Company Status 1 2 3 4 5 UMW Synergistic Generation Sdn. Bhd. * Sichuan Haihua Petroleum Steelpipe Co. Ltd. * PFP Holdings Pty. Ltd. * UMW Fabritech Sdn. Bhd. * UMW Coating Technologies (Tianjin) Co. Ltd. * COMPLETED rationalisation COMPLETED Commenced liquidation COMPLETED Commenced liquidation 6 Arabian Drilling Services LLC * Commenced liquidation 7 United Seamless Tubulaar Pvt. Ltd. Ceased operations, under receivership and to proceed with disposal of assets 8 Oil Country Tubular Limited Ongoing disposal onto the open market 9 10 11 12 13 14 15 16 Jaybee Drilling Pvt. Ltd. * UMW Sher (L) Ltd. * Shanghai BSW Petro-pipe Co. Ltd. Zhongyou BSS (Qinhuangdoa) Petropipe Co. Ltd. Tubulars International Pte. Ltd. UMW Oilfield International (M) Sdn. Bhd. / UMW Oilfield International (L) Ltd. * Jiangshu Tube-Cote Shuguang Coating Co. Ltd. Shanghai Tube-Cote Petroleum Pipe Coating Co. Ltd. Active negotiations * subsidiary 28
REMAINDER OF THE UNLISTED OIL & GAS SEGMENT Carrying value following write-downs RM 57m Associates & JVs Remaining carrying value for investments in associates and joint ventures We do not expect any further material impact to the Group RM 11m Subsidiaries Remaining carrying value for subsidiaries We do not expect any further material impact to the Group 29
Historical Performance 30
SELECTED GROUP FINANCIAL HIGHLIGHTS 1 2 Revenue (RM million) PATAMI (RM million) 12,770 10,721 12,820 13,536 15,817 14,933 14,442 13,952 10,437* 11,067 566 382 527 486 994 653 652 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (37) (641) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (1,658) 3 Gross Dividend Per Share of RM0.50 each (sen) 4 Dividend Payout Ratio (%) >100.0 37.0 20.0 30.0 31.0 50.0 44.0 41.0 20.0 57.7 59.0 75.8 75.2 58.8 78.7 76.1 0.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 March 08 Share Split from RM1.00 to RM0.50 each 0.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *Restated 31
Looking Ahead 32
OUR BROAD STRATEGY Focusing on mid to long term strategic initiatives to enhance growth Digitize and digitalize the Group s business strategy is aligned with digital strategy IoT like initiatives across our operations 02 01 03 Building capability & capacity Group Human Resource transformation initiatives Optimising our profitability and growth Continued focus on our three core businesses and monetising long held assets 33
EQUIPMENT STRATEGY Moving to strategic partnership and innovate new value-added solutions and services to complement product range Heavy Equipment o Leveraging on our partnership with Komatsu o Repositioning our heavy equipment business to focus more on urbanised sectors such as construction Industrial Equipment o Bringing other products into the existing regional network o Leveraging on Internet of Things (IoT) for enhancing product offering o Enhancing fleet management / rental business 34
M&E STRATEGY Further expansion into high-value / advance manufacturing Potential opportunities in HVM space Aerospace Entry Point Advance Land Transportation Industrial Automation High End Electronics Enable HVM in And Beyond Energy Medical Devices 35
MONETISING OUR LAND ASSETS o o o o o Serendah Land 861 acres. Plan to develop this into a High Value Manufacturing Park focusing on industrial. Signed an MoU with MIDA to collaborate on the park s development. Working with Invest Selangor and MATRADE. Part of the land currently housed the Rolls-Royce fan case project which acts as a catalyst for further development of Serendah UMW Aerospace Sdn. Bhd (24 acres) T7 Kilgour Sdn Bhd (2 acres) Private local company (5 acres) LOW-DENSITY RESIDENTIAL COMMUNITY COMMERCIAL CORE WITH INTEGRATED CONNECTION TO LANDSCAPE HIGH-END, LOW-DENSITY RESIDENTIAL COMMUNITY AEROSPACE INDUSTRY CLUSTER AUTOMOTIVE INDUSTRY CLUSTER MIXED-USE & RESIDENTIAL LOOP ROAD MEDIUM-DENSITY AFFORDABLE HOUSING COMMUNITY 36
2019 PROSPECTS AUTOMOTIVE New plant to produce volume driven models New plant started operations in 1Q19 Boost production capacity Exciting models to support strong sales growth Perodua to continue to register healthy growth with sustained demand from entry level segment OTHERS Monetising our land assets 861 acres of land in Serendah Plan to develop the land into a high-value manufacturing park Propose to sell/lease land EQUIPMENT Product and market expansion The JV with Komatsu will drive sales of Komatsu equipment in markets undergoing urbanization E-commerce boom would further strengthen the industrial equipment business Enhance leasing business M&E Segmental earnings to improve Auto components to continue to be the main segment contributor Focus on increasing GRANTT s presence and sales Aerospace to register narrowing losses (expected to be profitable in 2020) 37
THANK YOU Roza Shahnaz Omar Director, Group Strategy UMW Corporation Sdn. Bhd. S. Vikneshwaran Head, Investor, Media Relations & Sustainability Email: vikneshwaran.s@umw.com.my Telephone: +603 20252104 Corporate Portal www.umw.com.my 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.