28 April 2012
UMW Holdings to benefit from My Rapid Transit and light rail transit (LRT) line extension projects, in discussion with Japan's Komatsu Ltd to supply a broad range of heavy equipment to new markets overseas
(UMW closing stock price today (27.4.2012) was RM 7.83)
UMW Holdings Bhd is in discussion with Japan's Komatsu Ltd to supply a broad range of heavy equipment to new markets overseas, its chief said.
Currently, half of the revenue and profit for the group's heavy equipment division comes from overseas.
UMW wants to increase this, its president and chief executive officer Datuk Syed Hisham Syed Wazir said.
UMW holds the Komatsu franchise in Malaysia, Singapore, Papua New Guinea and Myanmar.
It offers equipment and parts for the construction, property development, infrastructure, mining, quarrying, logging and plantation sectors.
These include heavy equipment like excavators and fire engines, industrial equipment including forklifts and marine and power equipment for offshore businesses like oil rigs and vessels.
"The equipment business is doing very well under the Komatsu brand. Together with Komatsu, we will look for new markets overseas," Syed Hisham said in an interview with Business Times recently.
For fiscal 2011, UMW posted a pre-tax profit of RM1.38 billion on RM13.56 billion revenue. The heavy equipment division contributed RM63.2 million profit and RM2.08 billion revenue respectively.
Syed Hisham said UMW's operations in Myanmar, Vietnam and Papua New Guinea is expected to contribute higher returns in the next few years.
"Our heavy equipment business in these countries is set to benefit from increased activities in the jade and iron ore mining sectors there," he said.
Syed Hisham said UMW has budgeted RM50 million in capital expenditure this year to cater for growing demand for its range of heavy equipment.
At home, Syed Hisham expects the business for heavy equipment to grow by about eight per cent to 10 per cent this year buoyed by projects under the Economic Transformation Programme (ETP).
Syed Hisham said the ETP has stimulated many growth activities in construction, plantation and mining.
He said UMW's heavy equipment division is benefiting from projects such as the west coast expressway, the My Rapid Transit and light rail transit (LRT) line extension projects, as well as the Kuala Lumpur International Financial District development.
"Quarry and mining activities is also increasing with improved demand from iron ore mining, thus, the business for heavy equipment is set to improve. We also see the logging and plantation industries in Sarawak growing strong.
"Our Sabah branch has been experiencing good business because of increased construction projects. For Sabah, we are also offering new logging equipment, bigger excavators and dump trucks," Syed Hisham said.
For industrial equipment, he said UMW will continue to support the local small and medium enterprises, the logistics and plywood industries as well as the food and beverage sector.
"Our forklift rental business is one of the biggest in the industry with over 2,000 units available to clients, mostly from larger multi-national companies like Panaso-nic, Toyota and Perodua," he said.