MBM Resources Berhad : MBMR’s Multi-Brand Strategy Pays Off With Market-Beating Performance In 2011, 1Q12

MBMR's Multi-Brand Strategy Pays Off With Market-Beating Performance In 2011, 1Q12

20 Jun 2012

Total capital expenditure to reach RM180 million this year

Kuala Lumpur, June 20, 2012 - MBM Resources Berhad (MBMR), which is aiming to be one of the leading and most complete automotive groups in Malaysia and the region, believes that its multi-brand strategy is starting to pay off as it posted record revenue in 2011 and the first quarter of 2012 despite weak market conditions.

MBMR's revenue for the 12-month period ended 31 December 2011 increased by 12 per cent to RM1,706 million from RM1,528 million in 2010.

This was achieved on the back of a strong second half performance, especially by its Perodua and Volkswagen dealerships, which saw the Group's total vehicle sales for 2011 increase by two per cent to 23,236 units. In comparison, the total industry volume (TIV) for the Malaysian automotive industry had declined by 0.9 per cent.

However, MBMR's profit before tax in 2011 declined by 13 per cent to RM151 million, principally due to the strong Japanese Yen, disruption in parts supply caused by the Japan earthquake and floods in Thailand, and the taking in of a one-off cost incurred in the acquisition of automotive safety equipment manufacturer Hirotako Holdings Berhad.

MBMR continued to outpace the market in the first quarter of 2012. The company's revenue for the quarter ended 31 March 2012 increased by 33 per cent to RM544 million from RM410 million in 1Q2011. Profit before tax rose 21 per cent to RM56 million from RM46 million in the corresponding quarter last year.

The strong performance reflected for the first time, the significant contribution of Hirotako. Another major contributor was Federal Auto Holdings Berhad, whose sales increased by 55 per cent compared against 2011, driven by strong and growing demand for Volkswagen and Volvo cars.

Both combined to mitigate the effects of lower margins from growing competition as well as a declining automotive market under pressure from tightening credit that has affected the sales of Perodua cars this year.

MBMR managing director Looi Kok Loon said that the encouraging 2011 and 1Q12 results showed that Group's multi-brand strategy and expansion plans were paying off.

"Despite an increasingly challenging operating environment, we believe that we are in a very strong position to maintain our growth trajectory. Our plans remain firmly on schedule, with several major investments either already realised or in the process," he said.

This year, MBMR's total capital expenditure is set to reach RM180 million, the highest in the Group's history as it accelerates its transformation into a complete automotive group.

The amount includes investment in expanding retail networks and setting up of body and paint centres by Federal Auto and Daihatsu (Malaysia) Sdn Bhd, construction of Oriental Metal Industries (M) Sdn Bhd's new alloy wheel manufacturing plant in Rawang and research and development and new production capabilities at Hirotako.

"As we expand our Group's offerings to include a whole spectrum of aftersales products and services related to vehicle ownership, it will transform MBMR's earnings profile in the near future. These investments will help improve our margins substantially within the next three years," said Looi.

MBMR, which has been synonymous with the Daihatsu brand since its inception, has evolved into a diverse automotive group that represents some of the biggest international brands in Malaysia. They include commercial vehicle brands Daihatsu, Dongfeng and Hino; passenger car brands Perodua, Volvo, Volkswagen and Mitsubishi; and sports tuning brands, ABT and HeicoSportiv.

It is the leader in every market segment it competes in, with products that range from light, medium and heavy duty trucks and buses to entry-level compact cars and luxury sports utility vehicles.

By 2015, MBMR plans to become one of the leading and most complete automotive groups in Malaysia with a full spectrum of capabilities that include manufacturing and assembly, distribution, retail and dealerships, parts and accessories, body and paint repair and customer services.

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