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Latest Quarterly Results

Quarterly Report For The Financial Period Ended 30 September 2018

Financials Archive

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Condensed Consolidated Statements Of Profit Or Loss And Other Comprehensive Income
For The Quarter Ended 30 September 2018 - unaudited

Income Statement Ended 30 September 2018

The above condensed consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the audited financial statements for the year ended 31 December 2017 and the accompanying explanatory notes attached to these interim financial statements.

Condensed Consolidated Statements Of Financial Position
As At 30 September 2018 - unaudited

Balance Sheet Ended 30 September 2018

The above condensed consolidated statements of financial position should be read in conjunction with the audited financial statements for the year ended 31 December 2017 and the accompanying explanatory notes attached to these interim financial statements.

Operating Segments Review

Statement of Financial Position

The Group's net assets per share as at 30 September 2018 has reduced by RM0.04 to RM6.25 compared to 31 December 2017 of RM6.29. The decrease was mainly due to the foreign currency translation loss for foreign subsidiaries of RM10.8 million for the 9-month period, mainly caused by the weakening of Indonesia Rupiah against Malaysia Ringgit. Nevertheless, the Group financial position remains stable with the Current Ratio of 3.1 times (Current Ratio = Current Assets / Current Liabilities).

Capital Expenditure and Cash Flow Position

The Group maintains the same level of cash and cash equivalents at RM219 million as at 30 September 2018 and 30 September 2017. The payment for acquisition of property, plant and equipment has reduced by 53.5% compared to RM62.8 million spent for last year 9-month period. The significant level of capital expenditure in 2017 was mainly for the purchase and construction of plants in Australia, Thailand and Kulim.

As at 30 September 2018, the Group has capital commitments of RM67.3 million, mainly for upgrading of the production facilities and construction of plant in Melaka. The capital commitment will be funded by internal generated funds or bank borrowings.

Sufficient cash reserves are essential in the pursuit of growth and expansion. The Islamic Commercial Papers (“ICPs”) Programme and Islamic Medium Term Notes (“IMTNs”) of up to RM1.5 billion in nominal value can be utilized for future capital investment, if required.

Analysis of Performance of All Operating Segments
3Q18 vs. 3Q17

Total Industry Production Volume ("TIP") of motor vehicles in the third quarter of 2018 increased by 11% to reach a total of 139,551 units compared to 125,853 units in the same period last year. (Source: Malaysian Automotive Association). The increase in the production volume was mainly due to the encouraging car sales during the zero Goods and Services Tax (“GST”) period from June to August 2018.

The Group's revenue increased in tandem to the increase in production of vehicles, to RM336.0 million for the current quarter, compared to 3Q17 of RM291.4 million largely due to higher demand from OEMs. Interior and Plastics Division remains as the top revenue contributor with continued strong demand from certain OEM models.

However, the higher revenue did not translate into better profit before tax ("PBT"). The Group’s PBT in the current quarter declined from RM20.3 million to RM13.6 million, mainly due to higher material costs and unfavorable exchange on export sales suffered by Suspension division. Indonesia Operations' loss has worsened, caused by the weakening of Indonesia Rupiah against USD, which has impacted the raw material prices.

Year-on-date 2018 vs. Year-on-date 2017

On a year-on-date basis, the Group's revenue recorded 10.5% growth, contributed mainly by the Interior and Plastics division which increased by 12.1% or RM67.6 million. The increase was due to generally higher demand from OEM customers as explained earlier.

Correspondingly, the Group's PBT increased by 7.1% to RM53.0 million in the 9-month period as a result of higher demand from OEM customers coupled with favorable products mix that generated higher margin recorded in Interior and Plastics division.

Segment Review
Suspension Division

The higher demand for shock absorbers from certain OEM models brought in additional revenue to Suspension Division, resulting in the revenue increasing by 5.8% to RM57.2 million compared to RM54.1 million recorded in the same quarter of last year. Unfortunately, the Division’s PBT fell by 71.8% after suffering higher steel costs and lower average price for export. Sales denominated in US Dollar became unfavorable due to strengthening of Ringgit against US Dollar. Apart from that, the results in Q3'17 included a reversal of provision for product warranty claim.

For year-on-date of 2018, the Division's revenue increased by RM14.9 million (9.9%) mainly due to higher exports of leaf springs to the Europe and ASEAN regions and higher demand for leaf springs from local replacement and OEM markets.

Similar to the quarterly review, the Suspension division recorded PBT of RM6.9 million, a decrease of 56% due to the rising steel cost, unfavorable export price and reversal of provision for product warranty claim in last year same period, as explained earlier.

Interior & Plastics Division

For the current quarter, the Interior & Plastic division experienced growth in both revenue and profit before tax by RM29.5 million and RM4.6 million respectively. The higher demand from OEM customers resulted from the good car sales during the zero GST period from June to August 2018 which was the key contributor to the increase. In line with the increase in revenue, PBT had increased by 49.3% to RM14.0 million, largely due to favorable product mix that generated higher margin.

Consistent with the current quarter, on the year-on-date basis, revenue and PBT for the 9-month period of 2018 had increased from RM560.8 million to RM628.4 million and RM26.2 million to RM40.4 million respectively, largely due to the reasons mentioned earlier.

Electrical & Heat Exchange Division

Despite an increase in the TIP for the current quarter, revenue of the Electrical & Heat Exchange division saw a drop of 7.6% from RM37.9 million in the previous corresponding quarter to RM35.0 million. The decrease was mainly due to one of its key products which had reached end of product lifecycle since October 2017. Hence, the division's PBT decreased by RM0.3 million to RM1.2 million compared to the previous year same quarter of RM1.5 million.

In the first nine months, the Electrical & Heat Exchange posted RM97.9 million in revenue against RM109.2 million a year ago. The decrease was due to lower call-in for two major customers and one of its products which had reached end of product lifecycle since October 2017. Despite the decrease, profit before tax had more than doubled from RM2.1 million to RM5.1 million, mainly due to price adjustment (arising from foreign exchange fluctuation) for one of its customers and improved margin due to the strengthening of Ringgit that lowered the material costs.

Marketing Division

The Marketing Division increased its revenue by RM3.8 million or 5.9% quarter on quarter from RM64.5 million in 3Q17 to RM68.3 million. The higher sales activities were fueled by the increase of orders from local dealers before implementation of Sales and Services Tax ("SST") in Malaysia, increased logging activities (thanks to the Pan Borneo Highway project in East Malaysia) and launch of new range of products. However, the segment's PBT had decreased to RM2.5 million from RM2.9 million in the same quarter last year. This is mainly due to unfavorable product mix and higher promotional and advertising costs incurred for the period.

For year-on-date 2018, revenue increased from RM183.9 million to RM199.6 million, an increase of RM15.8 million (8.6%). The growth was attributed to the increase in the domestic market and export sales. APM’s products especially leaf springs are well received globally. The segment's PBT had increased to RM9.1 million from RM7.7 million in the same 9-month period last year, mainly due to the realised/unrealised net foreign exchange gains arising from trade debtors/creditors and bank balances.

Non-reportable segment, Malaysia

This segment comprises mainly operations relating to the rental of properties in Malaysia, provision of management services, and engineering and research services for companies within the Group. The revenue from these services formed part of inter-segment elimination for the total Group's results (as depicted in Note A9). In addition, this segment also comprises the business of casting, machining and assembly of aluminum parts and components and distribution of motor vehicles to internal and external customers.

Revenue for non-reportable segment increased by RM11.1 million (72.4%). Trading of motor vehicle business recorded historical high following the festive-driven sales campaigns, new model launches and "tax holiday" in Malaysia. However, higher administrative expenses especially staff costs and lower billing of service fee had impacted the division’s profitability.

Consistent with the above quarterly results, trading of motor vehicles was the main contributor to the revenue increase. Revenue for the nine-month period of 2018 increased from RM46.7 million to RM62.7 million recorded in the same period of last year. Despite the increased revenue, this segment recorded a loss of RM1.3 million compared to profit of RM0.9 million a year ago mainly due to higher administrative expenses.

Indonesia Operations

Indonesia Operations refers to the manufacture of suspension products such as coil springs and leaf springs and the Group’s investment in joint venture and associate in Indonesia.

The Indonesia Operations registered a marginal increase in revenue by 2.6% (3Q'18: RM15.3 million; 3Q'17: RM14.9 million), mainly contributed from leaf springs for local replacement market. The Indonesia Operations closed the quarter with a loss of RM3.9 million against a loss of RM1.5 million in the same quarter last year. The higher losses were due to increase in raw material cost and weakening of the Indonesia Rupiah ("IDR") against USD. The higher share of associate's loss (caused by lower revenue and adverse impact of forex rate of IDR to USD) has widened the loss of the Indonesia Operations for the current quarter.

Consistent with the above-mentioned factors, the revenue and loss for the Indonesia Operations for the nine months of 2018 increased by 4.2% to RM41.2 million and by 12.2% to RM7.6 million respectively.

All Other Segments

This business segment refers to our operations in Thailand, Vietnam, Australia, the United States of America, Netherlands and Myanmar ("Operations Outside Malaysia").

The revenue for the Operations outside Malaysia had decreased marginally by 2.5% (from RM33.8 million to RM32.9 million). The decrease was mainly due to lower off-take from OEM customers in Vietnam, especially for seat plant as the product has achieved end of product life cycle. Correspondingly, the Division recorded loss of RM1.2 million compared to profit of RM2.1 million in 3Q17. The loss for the current quarter was also caused by the rising material and operating costs for Vietnam Operations, higher operating costs in Australia resulting from the relocation of plant at Brisbane and higher operating costs which comprised mainly staff costs and depreciation for Thailand operations.

Likewise, for the year to date, revenue decreased marginally for this segment by 1.5% to RM93.1 million while registering negligible profit compared to a profit of RM3.8 million in the same period last year.

Commentary On Prospects and Targets, Strategies and Risk

APM is principally involved in the design, manufacturing, assembly and production of automotive and mobility components. APM’s main operation is located in Malaysia but it is also present in various other jurisdictions including United States of America, Netherlands, Australia, Thailand, Vietnam and the Republic of Indonesia.

Changes in policies and regulations as well as economic and currency uncertainties are the primary factors that could affect APM's performance. In this respect, APM has always exercised prudence in its business dealings.

The vehicle industry in Malaysia saw a marked increase in sales in Q3 in view of the zero GST for 3 months from June to August 2018. During those 3 months, the Total Industry Volume ("TIV") reached 165,257 units or 32% higher than that of the same period in 2017 (Source: Malaysian Automotive Association ("MAA")).

Uncertain economic and political environment, the rising cost of living, the weakening of the Ringgit versus the USD, the strict scrutiny of financial institutions on vehicle loan application, the lack of disposal income and the increase of materials due to the effect of the trade dispute waged by the US against China has largely attributed to the decline in consumer sentiments towards the acquisition of big-ticket items.

All these have led the Malaysian Automotive Association ("MAA") to revise its original TIV forecast downward from 590,000 to 585,000 even though TIV as of 30 September 2018 stood at 454,971 units, representing a 7% increase from the 425,678 units in the same period last year (Source: MAA).

APM acknowledges that change is constant and in order to remain sustainable, APM must remain relentless in the implementation of its 5-year strategy plan, which focuses on expansion, cost effective operations, research and development and branding enhancement activities.


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