15.08.2014

Tat Hong recovers in Oz

Singapore based crane rental company Tat Hong has published its first fiscal quarter results, which while continuing to decline, show positive signs in Australia.

Total revenues declined six percent to s$164.2 ($132 million), while pre-tax profits dropped 17 percent to s$10.3 million ($8.3 million).
Mobile and crawler crane rental was down just 3.6 percent to s$66.3 million ($53.3 million) due to declines in Singapore, offset by high revenues in Australia and Thailand.

Tower crane rental in China, was the only sector to post gains, increasing 21 percent to s$24.5 million ($19.7 million) thanks to a larger fleet and better utilisation.

Distribution sales declined a further 13.5 percent to s$57.1 million due to slower sales across Asia partially offset by improved revenues in Australia.
Finally General Rental plummeted 20.5 percent to s$16.3 million (s13.3 million) mostly due to a downturn in the Australian mining sector.

Chief executive Roland Ng, said: “We are pleased to note a turnaround in our Australian operations which benefited from increased crane rental activities primarily to LNG-related projects as well as cost containment measures implemented last year. Our tower crane rental business in China continued to perform well with a strong pipeline of projects. However, losses in our Indonesian subsidiaries have yet to be fully contained and this, together with the losses from our offshore and marine unit and lower profit contribution from the crane rental business in Singapore impacted our profitability for the quarter under review.”

“Whilst we are cautiously optimistic of our performance going forward, we do face pockets of weakness such as the slowing construction sector in Singapore, project delays and cost pressures. The marketplace is also getting more crowded and competitive compared with a few years ago. However, the infrastructure needs of Asia and Australia are immense and it will continue to drive the demand for our crane rental and tower crane rental services.”

Vertikal Comment

Tat Hong could well be ‘seeing the light at the end of the tunnel’ with declines in its key Australian market possibly beginning to bottom out? The news of cancelled projects in Singapore is a little disconcerting but the company has now sold the Hup Hin business reducing its exposure a little and the news for the general economy is relatively positive so one assumes the declines are temporary.

With the Chinese tower crane business going really well now and the Australian distribution business sure close to reaching the bottom, the mid-term future for the Singapore based group looks quite positive.