15.08.2011

Profits halved at Tat Hong

Asia/Pacific’s largest crane rental company Tat Hong has reported a sharp fall in first quarter profit on higher revenues.

Total revenues were up six percent to s$158.4, with growth in all sectors except tower crane rental. Distribution revenues improved three percent to $72.5 million thanks to strong excavator sales in Indonesia and improved crane sales in Singapore and Malaysia, offset by lower crane sales in Australia.

Crane Rental revenues climbed nine percent to $48.4 million due to increased activities in Singapore and Malaysia, along with other markets in the region including Papua New Guinea, Vietnam and Thailand. This was partially offset by lower revenues in Australia and Indonesia where cranes were off-hired from a number of projects reaching completion.

The General Equipment rental revenues leapt 35 percent, due to strong demand in Queensland and New South Wales, and from the new branches in Victoria and Western Australia.

Tower crane rental revenues dropped 12 percent to $14.9 million due to the comparison base which included six months revenues last year for Sichuan Tat Hong Yuan Zheng Machinery Co, like for like revenue growth of was actually 10 percent.

Pre-tax profits fell almost 50 percent to $9.27 million due to higher depreciation, lower sales of depreciated fixed assets and high repair and maintenance costs.

The company says that it is seeing increased crane activities in several of its South‐east Asian markets such as Singapore and Malaysia and for general equipment in Australia all of which lead it to be positive about its prospects for the year as a whole.

Tat Hong’s chief executive Roland Ng said: “On the whole, we expect margins for all divisions to remain tight in view of keen competition, particularly from overseas players in the heavy lift segment. However, we are heartened that the revenues of our distribution division have gradually improved over the quarters. Moving forward, we expect crane rental to maintain its growth momentum banking on the promising outlook for Singapore, Hong Kong, Australia and some key markets in South‐east Asia and we look forward to a better second half of the financial year.”

“Likewise, our tower crane rental division’s growth will continue to ride on the market opportunities in on‐going large building and infrastructure projects, especially those in Shenyang, Tianjin, Chongqing, Sichuan and Guangdong where our cranes have been deployed. The division will continue to exercise a tight cost control regime. We will also be focusing on making structural changes a priority for this division to enhance cost control.”

“Whilst the group had generated positive operating cash flow of S$14.9million in this quarter, one of our priorities will be to further improve our operating cash flow moving forward. “