UMW Holdings Bhd (4588)will consolidate and rationalise some of its core businesses to become leaner and meaner, its managing director Datuk Syed Hisham Syed Wazir said.
Consolidation is under way for its manufacturing and engineering and equipment divisions as UMW, among Malaysia's top five most admired companies according to the Asian Wall Street Journal, looks to leverage on its vast range of products and services.
The oil and gas (O&G) division may also be restructured, but Syed Hisham said UMW Oil & Gas Bhd's listing plan remains on the cards once it returns to profitability.
"We are looking at consolidating our businesses wherever possible so that UMW can become a strong and lean group. We should be able to leverage on the group's wide range of products and services in our international presence and also on the strength of each of our operations," Syed Hisham said in an interview to mark his first 100 days in Shah Alam, Selangor, recently.
"Right now, our operations are managed independently. Each SBU (strategic business unit) needs to help the others so that we can all reap maximum benefits. For example, we should be able to cross-sell our products and services effectively and achieve cost-savings through volume procurement of common items, etc," he added.
UMW's O&G division, which began in 2002, posted a net loss of RM48 million for the nine-month period ended September 30 last year.
This was due to the imposition of countervailing and anti-dumping duties by the US government on Chinese pipe importers.
The move had affected UMW group's major profit-contributing associate company, Wuxi Seamless Oil Pipe Co (WSP), Syed Hisham said.
However, WSP had secured new customers in world markets like Venezuela and should return to profit this year.
"Our O&G business segment has expanded rapidly since its establishment in 2002. I believe we need to take a good look at all our O&G businesses and see if we can restructure or rationalise some of our investments."
Syed Hisham said the group's jack-up rig Naga 2 was already working and will generate full-year revenue in 2011.
"We are now in negotiation stage with potential partners for the leasing of Naga 3 and we expect it to be in operation in the first quarter of 2011."
He added that its associate company in India, United Seamless Tubular Pte Ltd, had last August started commercial production of seamless pipes for the oil gas sector.
"This company will also be revenue-generating in 2011. The plant has a capacity of 300,000 metric tonnes per year," Syed Hisham said.
The year 2011 will also be a good year for its equipment business.
"We plan to maintain and possibly even expand our market share and performance. There will be a consolidation exercise in our Papua New Guinea operations," Syed Hisham said.
He said the manufacturing and engineering division had performed well last year and should sustain the performance this year.
"We are looking at some consolidation and some possible new areas for investment," he added.
UMW will continue to thrive more with its automotive business, though.
"The automotive industry is expected to show strong growth and that will benefit us," Syed Hisham said.
UMW controls about half of the country's new vehicle sales volume, thanks to its Toyota and Perodua business, and expects to maintain its market share this year.
About 78 per cent of the group's revenue for the nine months ended September last year came from automotive division. Earnings- wise, the division accounted for more than 90 per cent.
Syed Hisham said UMW was aiming to have equal revenue contribution from its automotive and non-automotive divisions over the next five years.
The group reported a 22 per cent rise in group revenue to RM9.4 billion for the nine months to September last year against RM7.3 billion a year ago.
Consolidation is under way for its manufacturing and engineering and equipment divisions as UMW, among Malaysia's top five most admired companies according to the Asian Wall Street Journal, looks to leverage on its vast range of products and services.
The oil and gas (O&G) division may also be restructured, but Syed Hisham said UMW Oil & Gas Bhd's listing plan remains on the cards once it returns to profitability.
"We are looking at consolidating our businesses wherever possible so that UMW can become a strong and lean group. We should be able to leverage on the group's wide range of products and services in our international presence and also on the strength of each of our operations," Syed Hisham said in an interview to mark his first 100 days in Shah Alam, Selangor, recently.
"Right now, our operations are managed independently. Each SBU (strategic business unit) needs to help the others so that we can all reap maximum benefits. For example, we should be able to cross-sell our products and services effectively and achieve cost-savings through volume procurement of common items, etc," he added.
UMW's O&G division, which began in 2002, posted a net loss of RM48 million for the nine-month period ended September 30 last year.This was due to the imposition of countervailing and anti-dumping duties by the US government on Chinese pipe importers.
The move had affected UMW group's major profit-contributing associate company, Wuxi Seamless Oil Pipe Co (WSP), Syed Hisham said.
However, WSP had secured new customers in world markets like Venezuela and should return to profit this year.
"Our O&G business segment has expanded rapidly since its establishment in 2002. I believe we need to take a good look at all our O&G businesses and see if we can restructure or rationalise some of our investments."
Syed Hisham said the group's jack-up rig Naga 2 was already working and will generate full-year revenue in 2011.
"We are now in negotiation stage with potential partners for the leasing of Naga 3 and we expect it to be in operation in the first quarter of 2011."
He added that its associate company in India, United Seamless Tubular Pte Ltd, had last August started commercial production of seamless pipes for the oil gas sector.
"This company will also be revenue-generating in 2011. The plant has a capacity of 300,000 metric tonnes per year," Syed Hisham said.
The year 2011 will also be a good year for its equipment business.
"We plan to maintain and possibly even expand our market share and performance. There will be a consolidation exercise in our Papua New Guinea operations," Syed Hisham said.
He said the manufacturing and engineering division had performed well last year and should sustain the performance this year.
"We are looking at some consolidation and some possible new areas for investment," he added.
UMW will continue to thrive more with its automotive business, though.
"The automotive industry is expected to show strong growth and that will benefit us," Syed Hisham said.
UMW controls about half of the country's new vehicle sales volume, thanks to its Toyota and Perodua business, and expects to maintain its market share this year.
About 78 per cent of the group's revenue for the nine months ended September last year came from automotive division. Earnings- wise, the division accounted for more than 90 per cent.
Syed Hisham said UMW was aiming to have equal revenue contribution from its automotive and non-automotive divisions over the next five years.
The group reported a 22 per cent rise in group revenue to RM9.4 billion for the nine months to September last year against RM7.3 billion a year ago.
Source: Business TImes 10 Feb 2011
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