MARC Ratings has affirmed its AA+IS rating on UMW Holdings Berhad’s (UMW) RM2.0 billion Islamic Medium-Term Notes (Sukuk Musharakah) Programme and its AA-IS rating on the RM2.0 billion Perpetual Sukuk Programme. The outlook on all ratings is stable.
The ratings reflect UMW’s strong business profile, underpinned by its leading position in Malaysia’s automotive industry through its stakes in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and UMW Toyota Motor Sdn Bhd (UMWT), which collectively accounted for about 50.6% of the total industry volume (TIV) of 159,763 units in 5M2026. The group continues to benefit from its long-standing relationship with a major Japanese automotive principal, Toyota Motor Corporation, as well as its strong brand recognition and extensive distribution and after-sales networks. The sizeable but manageable order backlog of approximately 54,000 units as at end-May 2026 reflected continued strong demand. The automotive segment remains the key earnings driver, contributing 84.6% of group revenue and 85.5% of profit before interest and taxes in the first nine months of financial year ended 31 March 2026 (9MFY2026).
The ratings are further supported by UMW’s diversified earnings base through its industrial equipment and manufacturing & engineering (M&E) divisions. The industrial equipment segment maintains a strong market position in Malaysia’s forklift market through its partnership with Toyota Industries Corporation and generates recurring income from leasing and after-sales services. Meanwhile, the M&E segment recorded revenue of RM1.1 billion in 9MFY2026, supported by improving performance in lubricants business. The group’s established operating track record, diversified business activities and strong market position across its operating segments provide resilience against cyclical fluctuations in any single business segment.
UMW maintains a conservative balance sheet and a strong liquidity position. As at end-March 2026, total borrowings had declined to RM921.3 million following debt repayments of RM400 million in November 2025, translating into a low debt-to-equity ratio of 0.21x, adjusted to include equity credit on the outstanding Perpetual Sukuk. The group remained in a net cash position, with consolidated cash balances of RM2.2 billion. Debt coverage metrics remained robust, with operating profit before interest, tax, depreciation and amortisation interest coverage of 22.1x and cash flow from operations (CFO) interest coverage of 26.2x in 9MFY2026. Planned capital expenditure of RM1.5 billion over the next three years is expected to be funded through internally generated funds from the respective operating entities, with management intending to continue reducing borrowings as outstanding under existing facilities mature.
The ratings also consider UMW’s strong financial flexibility, supported by substantial cash reserves, sizeable unencumbered assets and unutilised facilities. The group’s healthy cash flow generation, with CFO of RM902.9 million in 9MFY2026, provides strong support for debt servicing requirements, dividend distributions and planned investments.