Malaysia's UMW sees growth in car sales

KUALA LUMPUR (Reuters) - Malaysian autos-to-energy group UMW hopes to sell more cars after this year after launching new Toyota models and sees strong growth in its oil-services business but profit growth is set to slow to 10-15 percent from more than 50 percent in 2007.

UMW Holdings (UMWS.KL) Chief Executive Abdul Halim Harun told Reuters in an interview on Monday he expects 2008 car sales to rise 6-7 percent amid strong demand for small cars, but was cautious about the middle class and luxury car segments.

His full-year net profit forecast is well below last year's 51.5 percent profit jump, but beats an average analysts projection by Reuters Estimates for 9 percent growth.

"As far as the car sales is concerned, I don't see a slowdown," he said. "We'd like to see that growth contributed by the new models."

The forecast is above an industry projection of 4.7 percent growth in motor vehicle sales on continued growth in the Malaysian economy, which is officially projected to expand at a 6-6.5 percent pace in 2008 on the back of strong domestic demand.

UMW, which traces its roots to Singapore when it was established as a family business in 1917, had to undergo a revamp in the 1980s after facing financial difficulties.

Malaysian state fund Permodalan Nasional Asset Management controls 36 percent of UMW and the state Employees Provident Fund holds 14.75 percent, Reuters data shows.

Halim, a chartered accountant and soccer and bowling fan, joined in 2001 and put the focus on four core businesses -- auto, oil servicing, heavy equipment and manufacturing -- instead of nine.

INDUSTRY LEADER

UMW, a $2 billion company, controls almost half of Malaysia's car market through its joint venture, UMW Toyota Motor, and an associated company, Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

But Halim said he would not be able record the same sizzling growth the company saw in its net profit last year when the bottomline was boosted by strong all-round growth in its oil servicing, equipment and auto businesses.

"We should be looking at maybe 10 to 15 percent growth," he said, speaking at its headquarters, which cover 30 acres (12 hectares) in the industrial outskirts of Kuala Lumpur.

Toyota and Perodua compete against Proton Holdings (PROT.KL) and a number of foreign carmakers such as Honda Motor (7267.T) and Hyundai Motor (005380.KS).

Halim said the company's launch of Toyota Corolla Altis and the recent launch of the Toyota Rush would boost its sale of Toyota cars to 90,000 in 2008 from just over 80,000 last year.

LISTING DELAY

UMW may delay the listing of its oil-and-gas unit because of volatile markets but Halim gave no timetable.

"We have to see how the market moves.". The company had planned to list the unit in April.

UMW said in February it was looking to raise around 425 million ringgit in an IPO of the oil-and-gas business on the Malaysian stock exchange and through a rights issue.

Oil and gas, which spans exploration and oil-pipe fabrication, should account for 40 percent of net profit in two to three years from a quarter in 2007, Halim said.

The auto business could contribute half of profit over the next three years, down from near 60 percent last year.

Halim said 80 percent of the oil-and gas business came from abroad, the bulk from China. India would start contributing 10-15 percent of the unit's profit within three years, he said.

($1=3.192 Malaysian Ringgit)

(Editing by Jan Dahinten)