UMW in charter talks

Two potential clients for its jack-up rigs, company hopes to announce deal soon

SHAH ALAM: UMW Holdings Bhd is currently in talks with two parties – one local and one foreign – to charter its two jack-up rigs Naga 2 and Naga 3, said president and group chief executive officer Datuk Abdul Halim Harun.

“There are a lot of negotiations going on. The signs are positive and the chances are very good. We hope to make an announcement very soon,” he told a post-AGM press conference yesterday.

UMW took delivery of Naga 2 recently while Naga 3 will be ready soon.

Abdul Halim expects revenue contribution from Naga 2 and Naga 3 from the last quarter of the financial year ending Dec 31, 2010.

The group’s other rig, Naga 1, is currently on charter at a rate of about US$145,000 per day.

Abdul Halim said the group had started to see signs of improvement in the performance of its oil and gas (O&G) business this year.

“There are a few areas we are watching such as WSP Holdings Ltd due to the anti-dumping and counterveiling duties imposed on its products by the US which affected sales,” he said.

WSP is UMW’s associate company in China that manufactures oil country tubular goods.

Nevertheless, chairman Tan Sri Asmat Kamaludin said WSP was expected to improve its performance in the second half of the year as the group planned to pursue new export opportunities.

Another measure to counter lower sales would be to set up a plant in Thailand.

On the listing of its O&G arm, Abdul Halim said the group was still waiting for the correct time to do so.

“We were planning for 30 companies to be involved in the initial public offering but more companies; especially those that are performing well, would be injected as well,” he said, adding that there were currently 50 to 60 entities in the division.

Asmat said UMW would have to re-submit its application to list its O&G arm to the relevant authorities as the last approval had lapsed.

“Even if we have approval, we will need to see that the time is right,” he said.

On the group’s automotive business, Asmat was confident that Toyota and Perodua would maintain their market share with strong customer service programmes, upgrading of models and by offering high value for money and fuel efficient vehicles to its customers.

Last year, total sales of Toyota and Perodua vehicles amounted to 248,521 units, representing 46.29% of the total industry volume.

UMW’s net profit more than doubled to RM132.86mil in the first quarter ended March 31 from RM65.96mil a year earlier mainly due to improved margins from a favourable model mix and higher sales volume achieved by its automotive segment. Revenue rose 29% to RM3.03bil from RM2.35bil.

Asked about a news report that Asmat and Abdul Halim would be leaving UMW, Asmat said there was no basis for the article.

“Nobody stays permanently but when the time comes for change to be effected, I think the major shareholders will do the necessary consultation with our principal partners before we make any announcement,” he said.