Beyond Boundaries UMW Holdings Berhad Corporate Presentation 10 April 2018
1 Introduction
2 OUR JOURNEY Enhancing our capabilities
Laying the building blocks for excellence
Founded in 1917 Equipment Distribution Automotive Assembly Tier 1 Supplier
Bicycle repair shop >50 years with Komatsu >36 years with Toyota >50 years with TICO >25 years with Daihatsu
Fan Case Manufacturer for Rolls-Royce
UMW HOLDINGS BERHAD 3 OUR SHAREHOLDERS As at 31/03/2018
PNB
▪ Permodalan Nasional Berhad & PNB Managed Unit Trust Funds, 58.32%
58.32%
RM 7.2b EPF 31/03/2018 Foreign Shareholders
▪ Employees Provident Fund Board, Market Capitalisation ▪ Foreign Shareholders, 11.29% 9.41% 9.41%
11.29% 14.70% 6.28%
Other Local Shareholders KWAP
▪ Other Local Shareholders, 14.70% ▪ Kumpulan Wang Persaraan (Diperbadankan), 6.28%
UMW HOLDINGS BERHAD 4 OVERVIEW OF OUR BUSINESSES
01 Automotive 02 Equipment 03 M&E
• Manufacture • Distribution • Blending & distribution • Assembly • Trading of lubricants • Distribution • After-sales • Manufacture service • Sales & of service automotive components • Manufacture of fan case
04 Others
Oil & Gas - Unlisted
• Manufacture • Land rigs • Trading
UMW HOLDINGS BERHAD 5 INTERNATIONAL PRESENCE 10 countries
Automotive Equipment Myanmar Manufacturing & Engineering Oil & Gas
China
Vietnam
8,839 Malaysia ▪ Employees Papua New Guinea
Singapore
AA2 Australia ▪ RAM Indonesia ▪ Credit Rating Oman India
UMW HOLDINGS BERHAD 6 Our Automotive business
7 UMW AUTOMOTIVE SEGMENT
51% 38%
Investment holding, Investment holding and UMW Toyota Motor importation and distribution Perusahaan Otomobil Kedua provision of management and Sdn. Bhd.* of Toyota vehicles and Sdn. Bhd.** administrative services related parts
100% Perodua Sales Marketing and distribution of motor vehicles, related spare parts and Sdn. Bhd. other related activities
49% Perodua Auto Investment holding and 100% provision of management and Assembly Services Assembler of Corporation Sdn. Bhd.*** administrative services vehicles Sdn. Bhd. 51% Perodua Manufacturing Manufacturer and assembler 100% Automotive Industries Manufacturer and 49% of motor vehicles and other supplier of exhaust Sdn. Bhd. related activities Sdn. Bhd. systems 51% Manufacturer and assembler Perodua Global Manufacturing of motor vehicles and other 65% 49% Toyota Boshoku Manufacturer Sdn. Bhd. related activities UMW Sdn. Bhd. of car seats 49% Manufacturer and dealer in Perodua Engine Manufacturing component parts including 30% UMW Toyotsu Motors Sales and service of 51% Sdn. Bhd. engines, couplings and Toyota and Lexus transmission components Sdn. Bhd. vehicles and parts 30% Ingress Technologies Manufacturer of complete door assemblies and press parts 30% Toyota Capital Malaysia Hire purchase Sdn. Bhd. financing of Toyota Sdn. Bhd. customers 49% 51% Daihatsu Motor Co., Ltd Daihatsu Perodua Engine Manufacturer of engine and engine components for Energy Efficient Manufacturing Sdn. Bhd. Vehicles
* 39% Toyota Motor Corporation ** 20% Daihatsu Motor Co., Ltd 4.2% Mitsui & Co., Ltd ***41% Daihatsu Motor Co., Ltd 10% Toyota Tsusho Corporation 20% MBM Resources Bhd 2.8% Mitsui & Co., ( Asia Pacific) Pte Ltd 6% Mitsui Co., Ltd 8 10% PNB Equity Resource 5% Daihatsu (Malaysia) Sdn Bhd 4% Mitsui & Co., ( Asia Pacific) Pte Ltd Corporation Sdn Bhd TOTAL INDUSTRY VOLUME (TIV)
TIV % Change Over Previous Year RHS
Total Industry Volume (“TIV”) – Unit Sales LHS
1,200,000 Unit sales 25.0% 12.5% 12.7% 4.6% 4.5% Growth 15.0% 1,000,000 1.6% 0.0% -2.0% -0.8% 5.0% -13.0% -0.6% -5.0% 800,000 666,465 666,674 627,753 655,793 -15.0% 605,156 600,123 580,124 576,635 600,000 548,115 536,905 -25.0% -35.0% 400,000 -45.0% -55.0% 200,000 -65.0% 0 -75.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Malaysian Automotive Association
• Lower sales in 2017 were mainly due to weak consumer sentiment and stringent lending guidelines imposed by the financial institutions.
• Industry forecast for 2018 is 590,000 units (+2.3% growth)
UMW HOLDINGS BERHAD 9 LEXUS & TOYOTA
UMW Toyota Motor Market Share Of TIV RHS
UMW Toyota Motor Unit Sales LHS
200,000 18.6% Unit sales 20.0% 17.0% Market Share 18.0% 15.6% 15.3% 15.2% 14.8% 14.1% 14.4% 16.0% 150,000 12.2% 14.0% 11.2% 12.0% 101,839 106,622 103,636 95,861 100,000 91,990 88,662 92,521 10.0% 82,089 65,110 70,445 8.0% 6.0% 50,000 4.0% 2.0% 0 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Malaysian Automotive Association • Distributes 6 CKD and 7 CBU Toyota models. Lexus models are all CBU. • Top selling Toyota models in 2017 – Vios (35%) and Hilux (27%). • Importation of CBU cars and CKD components are transacted in US Dollar. • 2018 – more new models from Toyota and Lexus. • Target for 2018 is more than 70,000 units.
UMW HOLDINGS BERHAD 10 PERODUA
Perodua Market Share Of TIV RHS
Perodua Unit Sales LHS
Unit sales 350,000 40.0% Market Share 35.7% 35.5% 32.0% 300,000 30.5% 31.1% 31.2% 35.0% 30.0% 30.1% 29.9% 29.3% 30.0% 250,000 213,307 207,110 204,887 188,641 189,137 196,071 195,579 25.0% 200,000 179,989 167,393 166,736 20.0% 150,000 15.0% 100,000 10.0% 50,000 5.0%
0 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Malaysian Automotive Association
• Perodua maintained its No. 1 position in overall market share since 2006 (12th consecutive year) • Currently exporting to six countries - Indonesia, Singapore, Mauritius, Fiji, Sri Lanka and Brunei. • The all-new Perodua Myvi was launched on 16 November 2017. • Target for 2018 is 209,000 units (+2% growth).
UMW HOLDINGS BERHAD 11 UMW GROUP’S MARKET SHARE Units & Market Share (%)
• UMW companies sold 275,332
2016 units in 2017 with a market 207,110 2016 share of 48% (2016 – 47%) 35.7% 65,110 11.2% 35.5% Perodua 12.2% 204,887 UMW Toyota 70,445 Other Carmakers’ Market Share Brand 2017 2016
Units Market Units Market Share % Share %
Others Honda 109,511 19.0 91,830 15.8 301,303 Proton 70,991 12.3 72,290 12.5 Nissan 27,154 4.7 40,706 7.0 52.3% Mazda 9,730 1.7 12,493 2.2 Hyundai, Kia 8,241 1.4 9,470 1.6 Others 75,676 13.1 81,115 14.0 Total 301,303 307,904 2016 307,904 53.1%
Source: Malaysian Automotive Association
UMW HOLDINGS BERHAD 12 Our Equipment business
13 EQUIPMENT SEGMENT
Heavy Equipment Industrial Equipment Marine & Power Equipment
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
UMW HOLDINGS BERHAD 14 HEAVY EQUIPMENT
Malaysia Myanmar Since 1965 Singapore Papua New Guinea
• Komatsu franchise in Malaysia, Singapore, Myanmar and Papua New Guinea • Has strong presence in Myanmar, supplying equipment to the jade mining and resource mining sectors.
Since 1979 Since 1996 Delivered 38 units of Rosenbauer Panther Airport Fire Fighting Vehicles to MAHB from 2010-2015
UMW HOLDINGS BERHAD 15 INDUSTRIAL EQUIPMENT
Toyota Forklift Franchise
Malaysia China : Shanghai, Singapore Since 1965 Zhejiang Vietnam Brunei
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 5 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.
UMW HOLDINGS BERHAD 16 MARINE AND POWER EQUIPMENT
CompAir Honda Air Compressor Power Products
Ingersoll Rand Mitsubishi Centrifugal Marine Engines Compressor
GE Mitsubishi Reciprocating Gen-sets Compressor
UMW HOLDINGS BERHAD 17 Our Manufacturing & Engineering business
18 KEY PRODUCTS
Aerospace Component Lubricants
Lubricants & Aero Fluids Engine Fan Lubricants & Cases Fluids (China)
Fluids & Chemicals
Auto Components
Shock Automotive Absorbers Components & Power Steering
UMW HOLDINGS BERHAD 19 MANUFACTURE OF AERO ENGINE FAN CASES
UMW Aerospace Sdn Bhd
Component Part Manufacturing for RR’s Most Advanced Passenger Aircraft Engines
UMW is the 1st 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. Part of Rolls-Royce’s Asian Supply Chain • UMW will be the only supplier (‘single-source supplier’) for Single Source Final Assembly of the Trent 1000 fan cases for both the engines. and Trent 7000 engines in Singapore
• The manufacturing plant is located in Serendah, Selangor.
• Successfully delivered the first fan case on 29 November 2017.
UMW HOLDINGS BERHAD 20 2017 Financial Results (unaudited)
21 CORE SEGMENTS CONTINUED TO DELIVER HEALTHY RESULTS IN 2017
RM’ m
434 Combined total PBT of RM619m PBT
141
44
Automotive Equipment M&E*
❖ For M&E segment, the PBT displayed is from Auto Components and Lubricants businesses; excluding aerospace unit.
UMW HOLDINGS BERHAD 22 WRITE-DOWN ON INVESTMENTS & PROVISIONS FOR 2017 Part of the exit strategy for the Unlisted oil & gas segment
RM’ m Total 286.3 RM654 254.0 million
113.3
WriteRemeasurement-down of assets of to fair OthersWrite write-down downs on ProvisionProvisions for fair valuevalue - Oil & Gas Inventories & others anticipated early (Unlisted) settlement of financial guarantee
UMW HOLDINGS BERHAD 23 REMAINDER OF THE UNLISTED OIL & GAS SEGMENT Carrying value following write-downs
RM RM 87m 68m Associates & JVs Subsidiaries ▪Remaining carrying value for ▪Remaining carrying value for investments in associates and subsidiaries joint ventures ▪We do not expect any further ▪We do not expect any further material impact to the Group material impact to the Group
UMW HOLDINGS BERHAD 24 REMAINDER OF THE UNLISTED OIL & GAS SEGMENT Companies
No Company Status 1 UMW Synergistic Generation Sdn. Bhd. * ✓ COMPLETED rationalisation 2 Sichuan Haihua Petroleum Steelpipe Co. Ltd. * ✓ COMPLETED 3 PFP Holdings Pty. Ltd. * ✓ Completed disposal of PFP Taiwan
4 UMW Fabritech Sdn. Bhd. * ✓ Executed SPA, awaiting authorities approval 5 UMW Coating Technologies (Tianjin) Co. Ltd. * ✓ Executed SPA, awaiting authorities approval
6 Arabian Drilling Services LLC * ✓ Ceased operations, finalisation of disposal of assets
7 United Seamless Tubulaar Pvt. Ltd. ✓ Ceased operations, under receivership and to proceed with disposal of assets
8 Jaybee Drilling Pvt. Ltd. * 9 UMW Sher (L) Ltd. * 10 Shanghai BSW Petro-pipe Co. Ltd. 11 Zhongyou BSS (Qinhuangdoa) Petropipe Co. Ltd. 12 Oil Country Tubular Limited 13 Tubulars International Pte. Ltd. Active negotiations 14 UMW Oilfield International (M) Sdn. Bhd. / UMW Oilfield International (L) Ltd. * 15 Jiangshu Tube-Cote Shuguang Coating Co. Ltd. 16 Shanghai Tube-Cote Petroleum Pipe Coating Co. Ltd.
* subsidiary
UMW HOLDINGS BERHAD 25 ANALYSIS OF RESULTS BEFORE AND AFTER WRITE-DOWNS
Actual YTD Actual YTD RM'mil Dec 2017 Dec 2016 Profit/(loss) from Continuing Operations Automotive 433.7 496.9 Equipment 151.5 148.6 Manufacturing & Engineering (16.3) 24.6 Oil & Gas (Unlisted) (49.1) (28.5) Others (2.3) 10.9 517.6 652.5 Write-Downs - Others/Equipment (10.9) (64.0) - Others (Provision on FG) (253.9) (831.0) (264.8) (895.0)
Total Profit/(Loss) from Continuing Operations 252.8 (242.5)
Profit/(loss) from Discontinuing Operations - Oil & Gas (Listed) (156.3) (401.3) - Oil & Gas (Unlisted) (120.0) (142.4) (276.3) (543.7) Write-Downs - Oil & Gas (Listed) - (780.0) - Oil & Gas (Unlisted) (399.6) (564.0) - Loss on demerger (126.9) - (526.5) (1,344.0)
Total Profit/(Loss) from Discontinuing Operations (802.8) (1,887.7) Profit/(Loss) for the GROUP (550.0) (2,130.2) PATAMI (651.0) (1,658.0)
UMW HOLDINGS BERHAD 26 Past Performance Data
27 SELECTED GROUP FINANCIAL HIGHLIGHTS
1 2 ▪ Revenue (RM million) ▪ PBT (RM million)
15,817 2,020 14,933 14,442 1,622 13,952 13,536 1,365 1,436 12,770 12,820 1,277 1,313
856 847 10,721 10,959 9,976 270
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(2,130)
3 4 ▪ KPI – Annual Dividend Payout Ratio (%) ▪ KPI – Gross Dividend Per Share of RM 0.50 each (sen)
100.0 75.8 75.2 78.7 76.1 50.0 57.7 59.0 58.8 44.0 50.8 37.0 41.0 30.0 30.0 31.0 20.0 20.0
0.0 0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
March 08 Share Split from RM1.00 to RM0.50 each
UMW HOLDINGS BERHAD 28 Prospects for 2018
29 2018 – CURRENT PROSPECTS
Automotive Equipment
New models for 2018 Product and market expansion
▪ UMW Toyota to launch new car models to boost ▪ Leveraging on Partner’s (KOMATSU & TICO) market share (target sales of more than 70k units) strength to boost product range and market ▪ Strengthening ringgit would lead to better margins penetration ▪ Perodua contribution sustainable with continued ▪ Expanding value added services – total solutions strong demand in entry level segment (target 209k) provider
M&E Others
Growth area Focus on divestment of unlisted Oil & Gas assets ▪ Increasing market share for lubricants business in existing markets (Malaysia, China Indonesia) ▪ UMW is actively implementing action plans towards exit from this segment ▪ Aerospace plant commence full operations and ramp up production ▪ Target complete disposal by 2018 ▪ Possible write-backs if industry improves
30 Mergers & Acquisition
31 CONTINUED EXPANSION OF OUR BUSINESS – AUTOMOTIVE Game Changer - Merger & Acquisition Strategy (9 March 2018)
Perodua
50.07% + 49.93% 10.0%
(3) (1) (2) 10% stake in Perusahaan 50.07% stake in MBM Mandatory general offer Automobil Kedua Sdn Bhd Resources Berhad (“the (MO) will be made to the (“PERODUA”) for a purchase Company” or “MBMR”) for a remaining shareholders of consideration of RM418m purchase consideration of the Company of RM499m from PNB Equity Resources RM501m Corporation (“PERC”)
(1) & (3) - The offers shall remain open for acceptance until 5.00 p.m. on 28 March 2018
UMW HOLDINGS BERHAD 32 RATIONALE AND BENEFITS – PROPOSED ACQUISITIONS The Proposed Acquisitions are consistent with our strategy to enhance our core businesses
Increase strategic stake in Perodua ▪ Effective interest in Perodua will increase from 38.0% to 60.6% after completion of the 1 Proposed MBM Resources acquisition and assuming full acceptance of the Proposed MO ▪ Further increase to 70.6% after the completion of the Proposed Perodua Acquisition
Increase exposure in the commercial vehicle segment 2 ▪ Assimilating MBM Resources’s multi-brand dealerships i.e. Daihatsu and Hino vehicles
Widen our offerings in the manufacturing segment ▪ Integrating MBMR’s auto parts manufacturing business – wheels 3 manufacturing, safety products and noise, vibration and harshness products
Improve prospects in the automotive segment ▪ Leveraging on Perodua’s strength in the national car segment, coupled with the 4 Company’s existing presence in the non-national car segment via the Toyota marque ▪ Benefit from economies of scale and create synergies
UMW HOLDINGS BERHAD 33 FUNDING REQUIREMENTS
RM 1,001 million RM 418 million
MBM Resources Perodua 100% 10.0%
RIGHTS ISSUE* INTERNAL FUNDS + UMW SHARES • Amount raised via the Rights Issue (RI) would depend on the cash or shares option selected by MBMR’s minority shareholders as payment
• Pending the RI, UMW undertakes bridging facility to fund the deal
• Excludes about RM 71m transaction and other costs
34 Looking Ahead
35 TOWARDS A RESILIENT ORGANIZATION
The broad strategic framework towards managing Group’s challenges and future needs
CONTINUED EXPANSION OF OUR CORE BUSINESS
01
MONETIZING ADDRESSING 02 03 LONG HELD, EXIT OF LAND ASSETS UNLISTED OIL & GAS SEGMENT
UMW HOLDINGS BERHAD 36 CONTINUED EXPANSION OF OUR BUSINESS
AUTOMOTIVE EQUIPMENT M&E Enhancing and Strengthening of Continued expansion optimizing profitability heavy and industrial of core business and equipment segment HVM
UMW HOLDINGS BERHAD 37 CONTINUED EXPANSION OF OUR BUSINESS – AUTOMOTIVE New Plant
o Second plant – located in Bukit Raja, Klang o Strategic location o High automation VALUE DRIVERS o Focus on passenger vehicles o Plant & land size - 670,000 m². o Boost capacity and capability o Total Investment – RM1.8 billion o Annual Capacity - 50,000 units. (Initial) o More exciting new locally- o Expected to start operations in early 2019. assembled (CKD) models
o Promotes localisation
o Competitive pricing
o Meeting market expectations on Energy-Efficient-Vehicles (EEV)
UMW HOLDINGS BERHAD 38 MONETISING LONG HELD, LAND ASSETS
o Serendah Land – 861 acres o Opportunity exist for unlocking of value. o Part of the land currently housed the Rolls-Royce fan casing project which acts as a catalyst for further development of Serendah.
UMW Aerospace Sdn. Bhd (24 acres)
T7 Kilgour Sdn Bhd (2 acres)
LOW-DENSITY RESIDENTIAL COMMUNITY AEROSPACE COMMERCIAL CORE WITH INTEGRATED HIGH-END, LOW-DENSITY INDUSTRY AUTOMOTIVE INDUSTRY CONNECTION TO LANDSCAPE RESIDENTIAL COMMUNITY CLUSTER CLUSTER
MIXED-USE & RESIDENTIAL LOOP MEDIUM-DENSITY AFFORDABLE HOUSING ROAD COMMUNITY
UMW HOLDINGS BERHAD 39 THANK YOU
Roza Shahnaz Omar S. Vikneshwaran Director, Group Strategy Head, Investor, Media Relations & Sustainability UMW Corporation Sdn. Bhd. Email: [email protected] Telephone: +603 5163 5000
Corporate Portal www.umw.com.my
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