KUALA LUMPUR : Malaysian conglomerate DRB-Hicom said on Thursday it is aiming to raise the share of services in its revenue to 50% over the next five years as it seeks to cut heavy reliance on automotive business.
The company, which owns carmaker Proton and mainly assembles foreign-branded vehicles such as Honda and Mercedes Benz, plans to boost its services business that ranges from logistics to waste disposal and currently accounts for less than 20% of total revenue, DRB-Hicom chief executive Syed Faisal Albar said.
“DRB-Hicom has scanned through the industries that we can go in,” he told reporters after a shareholders’ extraordinary general meeting, “and it was decided that services sector, particularly logistics, is one area where we would like to be in.”
In Thursday’s meeting, shareholders of DRB-Hicom approved a proposal to merge KL Airport Services Sdn Bhd with postal delivery service provider Pos Malaysia and transfer a free-hold property to the company as part of DRB-Hicom’s broader push to consolidate its logistics businesses under Pos Malaysia. Following the deals, DRB-Hicom’s stake in Pos Malaysia will rise to 53.5% from the current 32.2%, the company said in a statement.
“This merged businesses between Pos Malaysia and KLAS will create an end-to-end integrated logistics fulfilment provider encapsulating services such as warehousing, haulage, courier, custom clearance at ports and airports, to cater for both domestic and regional businesses,” said DRB-Hicom’s Chairman, Brigadier General Mohd Khamil Jamil.
The continued push into logistics sector comes as DRB-Hicom struggles to turn around the loss-making Proton Holdings unit since its acquisition in 2012. Proton took a soft loan of 1.5 billion ringgit ($384.9 million) in April that came with some strict conditions including seeking a foreign partner.
However, Syed Faisal declined to comment on the progress in securing a foreign partner for Proton.
Meanwhile, an industry-wide decline in vehicle sales in Malaysia over the past two years weighed on DRB Hicom’s assembly of other marques, worsening woes of its automotive business.
Vehicle sales in Malaysia plunged nearly 15% between January and June, according to latest data from Malaysian Automotive Association, as consumers delay or scrap purchases of big ticket items to weather a slowing economy and higher cost of living.
Last year, DRB-Hicom bought Gading Sari Aviation Services, which mainly manages postal mails and courier services in Malaysia, for 72 million ringgit ($17.9 million) to scale up its logistics operation.
