UMW clarifies oil & gas unit losses

The UMW Group said it viewed the losses in its Oil & Gas Division as a temporary setback, as it has a number of greenfield projects which are expected to generate income and show positive results upon commencement of operations in the second half of this year.

As such, it considers a recent news article by a local paper quoting a source and referring to large losses or provisions for losses being required in its O&G unit, as not only inaccurate and baseless but misleading to investors.

In a statement, the group said the O&G Division suffered a loss of RM19.234 million in the first quarter, which was duly disclosed and reasons explained in an announcement on May 20, 2010.

The losses were attributed to decreased drilling activities worldwide which resulted in a significant drop in demand for Oil Country Tubular Goods (OCTG), while the countervailing and anti-dumping duties on seamless pipes made in China imposed by the United States, had affected the profitability of its associated company in the country.
UMW maintained that it has good corporate governance standards and transparent reporting methods.

However, the news article had implied that the group had incurred huge losses which had not been accounted for and which need provisions in the next few years.

"We view this as a baseless allegation as we were not able to provide our perspective or input on the matter," it added.

Meanwhile, the UMW Group is involved in four core businesses - Automotive, Equipment, Manufacturing and Engineering, and Oil and Gas. -- Bernama