14.02.2014

Tat Hong slowdown continues

Singapore based crane rental and distribution group Tat-Hong has reported steel third quarter falls in revenues and profits.

Total revenues for the nine months were down 17 percent to s$528.2 million, while pre-tax profits slipped 46 percent to $40.7 million.

Looking at the third quarter revenues fell 19 percent to $167.4 million while pre-tax profits plummeted 39 percent to $14.7 million, with all divisions except for tower crane rental declining.

Revenues in the Crane rental business declined 15 percent to $62.7 million with sharply lower revenues in Australia and Malaysia partially offset by better performance in Singapore, Hong Kong and Thailand.

The Tower Crane division, most of which is in China improved 23 percent to $23.7million, with a utilisation rate of almost 80 percent at the end December in spite of an increase in the fleet size to 881 units from 794 units a year ago.

The General equipment rental business, which is almost exclusively based in Australia, suffered a 32 percent drop to S$15.3 million. Distribution fell 28 percent to S$65.7 million, with higher revenues in Australia including increased crane sales, offset by weaker excavator sales in Indonesia.

Chief executive Roland Ng said: “The slowdown in our single largest market, Australia, continued to widen and deepen. This, together with a volatile currency, high interest rates and a weak commodities sector in Indonesia has hurt our third quarter bottom line. Given the difficult operating environment in Australia and Indonesia and in the face of rising costs and increasing competition, we have made cost containment, improving operational efficiency and increasing the returns on our assets key priorities in the short to medium-term.”

“Sector-wise, we still hold our positive view about the long-term prospects of our crane rental Business, given the pipeline of planned infrastructure and oil and gas projects in the region which will provide resilience to earnings in the future. Good prospects are also expected for our tower crane rental business in China which has grown at a steady pace. Despite talks of a slowing economy, the current urbanisation programme in China has given impetus to infrastructural, power generation and large commercial projects which in turn drive the demand for our tower crane rental services.”