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Wednesday, June 17, 2015

MBM Resources sees meaningful contributions from new investments

KUALA LUMPUR: MBM Resources Bhd (MBMR) expects meaningful contributions from its investments in upgrading its service centres from this year onwards.

MBMR group managing director Looi Kok Loon said on Tuesday the decision to add capacity by upgrading existing service centres enabled it to tap into the after-sales business.

The after-sales business, he said, “continues to be highly lucrative recurring income generator”.  “It also helped us diversify our income stream by lessening the dependence on vehicle sales,” he said in a statement.

MBM Resources, Looi said, was entering a period of steady and sustainable growth that would enable it to deliver consistent returns to shareholders.

Its five-year annual average shareholders’ return of 19.1% far surpasses the FBM Kuala Lumpur Composite Index’s 9.8%.
 
MBMR’s new investments, which involved significant capital expenditure, were strategically necessary to secure the company’s future. They were now ready to take off after a period of gestation in the previous year.
 
These included capacity expansion of OMI Alloy (M) Sdn Bhd’s alloy wheel manufacturing plant in Rawang, further network expansion to tap into the lucrative vehicle aftersales service market and commencement of distributorship for Iveco commercial vehicles. 
 
For the 12-month period ended Dec 31, 2014, MBMR recorded revenues of RM1.774bil, down 9.5%. Profit before tax was RM132.2mil, down 14.9% from the previous year, mainly due to start-up costs from new investments.
 
MBMR could take heart that its existing businesses continued to perform well with profit before tax growing by 7% in 2014 to RM183.9mil from RM171.8mil in the previous year.
 
In 2014, MBMR’s 46-branch network recorded an 11% increase in service centre throughput although vehicle sales declined by six per cent.  
 
Looi pointed out the automotive parts manufacturing division would continue to play a key role in driving MBMR’s growth.
 
Rising domestic vehicle production and advancing safety standards have benefited MBMR’s subsidiaries such as steel wheel producer Oriental Metal Industries (M) Sdn Bhd and OMI Alloy.  
 
OMI Alloy’s production this year was expected to grow by six fold to an estimated 200,000 units underpinned by rising demand for alloy wheels in the country and new orders from vehicle manufacturers.
 
Jointly controlled entity Autoliv Hirotako Sdn Bhd (AHSB), the specialist in safety restraint systems, continued to be the market leader in seatbelts and airbags supply.  

The company was set to gain from growth opportunities from current products and the new products to meet higher levels of vehicle safety.

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