30.05.2014

Tat Hong decline gains pace

Singapore based crane rental company Tat Hong has reported further steep declines in revenues and profits in its fourth quarter.

Revenues for the full year ended down 18 percent at $684.1 million, while pre-tax profits fell 52 percent to $48.9 million.

Mobile crane rental slipped 15.5 percent, General Equipment 27.1 percent, while tower crane rental – mostly in China - was the only positive result with a 20.5 percent improvement. Equipment sales and distribution fell 26 percent.

Moving on to the fourth quarter the slowdown gained pace with revenues falling 22 percent to $155.9 million, with pre-tax profits dropping 70 percent to $8.27 million.

Mobile crane rental fell 20.4 percent compared to the same period last year, general equipment 27.1 percent and distribution down 32.9 percent – once again tower crane rental was positive improving 34.7 percent.

Chief executive Roland Ng said: “Our fiscal year 2014 was challenging for Tat Hong as all our markets, with the exception of China, did not perform well. While the group did benefit from one-off gains, these were, in a large part, offset by foreign exchange losses and impairment charges."

"Notwithstanding our weaker performance this year, we have reason to be optimistic of our future prospects as Asia’s infrastructure requirements are estimated at US$750 billion a year till 20202 and Tat Hong, with our wide footprint in the crane rental space across the region, is well-placed to participate in this infrastructure ramp up. Our Australian subsidiary should also perform better this year as urban infrastructure and major LNG projects are expected to pick up momentum. We are cautiously optimistic that all our markets will perform better in FY2015.”

Vertikal Comment

Tat Hong has been hit hard by the slow down in Australia and parts of Asia, but it also was one of the net beneficiaries in prior years when much of the rest of the world was in the doldrums. The company continues to build the business and should bounce back as the economic situation improves or stabilises. Until then it is still profitable and is in a position to take advantage of any opportunities that might pop up.