Drb-Hicom Ar 2020
Total Page：16
File Type：pdf, Size：1020Kb
DRB-HICOM 94 ANNUAL REPORT 2020 “THERE ARE TWO WAYS OF SPREADING LIGHT; TO BE THE CANDLE OR THE MIRROR THAT REFLECTS IT” - EDITH WHARTON, NOVELIST DRB-HICOM ANNUAL REPORT 2020 95 HIGHLIGHTS CORPORATE DISCLOSURE REVIEW PERFORMANCE PERSPECTIVE LEADERSHIP 96 Chairman’s Message 98 Management Discussion and Analysis (MD&A) 98 • Group Managing Director’s Foreword 104 • Operational Review ACCOUNTABILITY 110 • Business Review 110 - Automotive Sector 122 - Services Sector 126 - Properties Sector PERSPECTIVE FINANCIAL STATEMENTS RELATED INFORMATION DRB-HICOM 96 ANNUAL REPORT 2020 CHAIRMAN’S MESSAGE Dear Shareholders, It is indeed a pleasure to pen down my message for the very first time as Chairman of DRB- HICOM Berhad (“DRB-HICOM”, “the Group”) and I would like to take this opportunity to firstly record my sincere appreciation and thanks to all my Board colleagues and staff throughout the Group for the warm reception and welcome that has been extended to me since coming on board. In view of the current COVID-19 challenges, the format of my on-boarding programme has been different from the previous ones and had to be adapted to cater for the many restrictions in place. Challenging External Environment Business Performance My appointment came at a time of profound global changes For the reporting period, DRB-HICOM continued to deliver and uncertainties taking place with the global and Malaysian a commendable performance despite the challenging economies recording a contraction of 4.3% and 5.6% respectively business landscape. Overall, the Group recorded a revenue of due to the unprecedented impacts of the pandemic on both the RM13.2 billion with a net profit of RM554 million for the year. The health of individuals as well as the economies. Many of the Automotive Sector remained the anchor sector for the Group consequences of this episode have led to permanent changes in with successes in launches of new models, more collaboration the way we live, think and conduct our businesses going forward. arrangements with technical partners, expansion of production facilities and enhanced presence in the areas of automotive sales As for the Group, we implemented timely and strategic and services. responses to these external challenges. As our staff health and safety remains our top priority, the Management established Meanwhile, the Services Sector had a mixed and challenging a COVID-19 Committee (“C19C”) to monitor the situation and performance as they were most affected by the pandemic, orchestrated intervention and mitigation efforts across the resulting in more initiatives and mitigations being put in place Group. Subsequently, a Business Recovery Task Force (“BRTF”) including digital solutions. The Property Sector successfully comprising of leaders from all subsidiaries was also set up pursued the strategic intent to focus on industrial properties to provide the overall stewardship to ensure DRB-HICOM’s development by streamlining their portfolio through divestment business interests and risks are efficiently managed during of non-core assets. these challenging times. I must commend the Group Managing Director and members of the leadership team for their timely and decisive actions. DRB-HICOM ANNUAL REPORT 2020 97 HIGHLIGHTS Commitment to Environment, Social and Governance Looking Ahead Our companies continued to play its active role to be a responsible Going forward, the Board and I are committed to continue corporate citizen through its CSR activities in. In trying to aid exercising good corporate governance and at the same time, efforts of managing COVID-19, DRB-HICOM contributed RM1 explore new ways to further expand and strengthen our business CORPORATE million towards the Government’s Tabung COVID-19. At the whilst leveraging on digital technologies. Emphasis will also be DISCLOSURE same time, we also donated 30 units of ventilators worth RM1.24 given to the organisational culture, and efforts will be taken to million to the Ministry of Health for distribution to hospitals that further enhance our talent management systems including the are in dire need of the critical equipment nationwide. National attraction, retention and development of talents. I truly believe carmaker PROTON began producing face shields early into the these are prerequisites to ensure we have progressive and robust pandemic; some 136,000 units were produced and handed over business entities throughout the DRB-HICOM Group in order to to MOH for use by medical frontliners. Other subsidiaries too prepare us for an uncertain future. contributed in many ways towards the COVID-19 cause, either REVIEW nationally or at the state level. Acknowledgements PERFORMANCE In September 2020, DRB-HICOM’s subsidiary, Bank Muamalat I would like to start my acknowledgments by expressing my Malaysia Berhad (“Bank Muamalat”) launched the Jariah Fund. sincere gratitude to my predecessor, Dato’ Mohammad Zainal It is a crowdfunding platform for social welfare projects through Shaari for his contribution in steering the Group during his the application of financial technology. Jariah Fund is one of tenure. On behalf of the Board, I would also like to record our Bank Muamalat’s efforts to assist the underprivileged and appreciation to Dato’ Sri Syed Faisal Albar, his leadership team continuously contribute to society. and all the staff throughout the Group for their efforts and sacrifices which proved to be invaluable throughout the reporting LEADERSHIP We also play our role on the environment, social and governance year. (“ESG”) front. The PROTON Tanjong Malim plant has implemented a recycled water initiative since 2015 to channel waste water from Finally, on behalf of the Board, I would like to register our the plant back to its manufacturing process as an initiative to appreciation to all our shareholders and our stakeholders optimise water consumption and increase plant efficiency. This including the Government Authorities, our partners, vendors and has resulted in 60% of waste water being re-used at the facility. all others who have been supportive and instrumental during these challenging times and always encouraging us to continue Meanwhile, in collaboration with Badan Kawal Selia Air Negeri creating value for the DRB-HICOM Group. Melaka, Composites Technology Research Malaysia Sdn. Bhd. ACCOUNTABILITY (“CTRM”) initiated a tube well project to mitigate any water Thank you. disruption in their operations during the drought season in FY2020. Water is a key component in composites manufacturing Best regards and stay safe, and this initiative makes use of groundwater as an alternative water supply. Wan Zul PERSPECTIVE FINANCIAL STATEMENTS RELATED INFORMATION DRB-HICOM 98 ANNUAL REPORT 2020 MANAGEMENT DISCUSSION & ANALYSIS GROUP MANAGING DIRECTOR’S FOREWORD History will record the year 2020 with many things. The United Kingdom formally left the European Union in January, the cold continent of the Antarctica hit its highest ever temperature of 18.3oc in February, Joe Biden and Kamala Harris won a historic American election, and in March, Malaysia saw a new Government created. But chiefly, it will be remembered as the year when the COVID-19 pandemic sent the global economy into a tailspin. Enough has been written about the impact of the pandemic to the economy. Suffice to say that globally, trade shrunk as movements were curtailed and the focus was fighting the virus. Malaysia saw its Gross Domestic Product (“GDP”) shrunk 5.6% in 2020, after growing more than 4% in 2019. DRB-HICOM is proud to have been able to withstand the acid test, and deliver a commendable performance in the end. We may have stood up against the invisible bully and delivered, but lest we think the worst is over, I wish to remind you that the road ahead remains daunting. A Challenging Environment As per Bank Negara Malaysia’s (“BNM”) report1, the economic The domestic property market was hard hit by the pandemic, contraction was expected, given the movement restrictions that with transaction numbers slipping almost 10% in 2020 from were imposed. Indeed, all economic sectors recorded negative the previous year. Of the 295,968 property transactions (valued growth except for manufacturing, and as the population became at RM119.08 billion) in 2020, only 1% was for industrial units. more guarded with their money, public consumption also Residential properties saw activity boosted by the Home moderated. Ownership Campaign that was extended by the Government, lowering property acquisition costs via tax breaks. Despite the economic turmoil, the Government’s efforts to spur the domestic economy helped, with policy measures including More than 118,000 units of industrial property remains in the PENJANA, KITA PRIHATIN, Budget 2021 and PERMAI enabling market in 2020. But the National Property Information Centre consumption to rise. DRB-HICOM benefitted from policies such in their 2020 property market report2 remain positive on the as the sales tax holiday for vehicle purchases, with national prospects for 2021. carmaker PROTON recording another positive year. The total industry volume (“TIV”) of the automotive industry of just under 530,000 units may look poor against the original forecast of 607,000 units, but it is way above the 400,000 units forecast at the start of the pandemic (this figure was revised to 470,000 later). 1 https://www.bnm.gov.my/-/quarterly-developments-q4-2020 2 https://napic.jpph.gov.my/portal/web/guest/main-page DRB-HICOM ANNUAL REPORT 2020 99 HIGHLIGHTS 2020 IN FOCUS The Automotive Sector’s RM8.0 billion revenue in FY2020 was driven by national carmaker PROTON. Driven by the sales tax Whatever DRB-HICOM planned for 2020 was thrown into disarray holiday, PROTON’s sales in the last quarter of 2020 came in at the moment the very necessary movement control order (“MCO”) RM2.6 billion, the best quarterly performance for the year. was activated on 18 March 2020. Yet, the five-year plan we CORPORATE envisioned in FY2016/17 remained in sharp focus. In the Services Sector, revenue came in at RM3.5 billion in DISCLOSURE FY2020, mainly boosted by the performance of postal and PROTON was able to retain its second spot in terms of sales in logistics subsidiaries as well as banking operations.