13.08.2013

Slow start for Tat Hong

Singapore based crane group Tat Hong has reported first quarter results with steep falls in revenues and profits.

Total revenues for the three months to the end of June were down 18 percent to $175.5 million, with Distribution down 28 percent to $66 million thanks to slower sales in Australia, Indonesia and Singapore. The crawler and mobile crane rental division saw revenues drop almost 14 percent to $68.8 million, due to lower activity in Australia, Thailand and Malaysia, partially offset by improvements in Singapore and Hong Kong. General Rental is largely Australian based and fell 16 percent to $20.5 million, while the Tower crane division posted a six percent improvement thanks to a larger active fleet in China, coupled with better utilisation.

Pre-tax profits for the period more than halved – dropping 53 percent to $12.4 million due largely to the lower revenues.

Chief executive Roland Ng said: “We remain confident about our crane rental business as the dip in revenue in the first quarter was the result of a number of our cranes being off-hire or in the process of being deployed to new projects. The demand for crane rental services in the region continues to be encouraging, underpinned by a strong pipeline of projects especially in the infrastructure and oil and gas space. In Australia, our committed contracts from the LNG projects should offer good employment for our cranes even as weak economy conditions are expected to prevail in the country.”

“Outside of our crane rental business, pockets of weakness exist especially in our subsidiaries in Australia and Indonesia which have impacted our overall performance. However, with the remedial actions that we are taking, we expect to mitigate the situation. Barring unforeseen developments, we are cautiously optimistic of our performance for FY2014.”

Vertikal Comment

While the numbers do not look great for the quarter, a good deal of this is timing related, although Australia is a significant part of the business and with the Chinese economy slowing, Australia is likely to be affected.

Tat Hong has very good geographic spread across Asia and will almost certainly benefit from buoyancy in other parts of the region and is likely to meet its full year forecasts in spite of the slow start.