13.02.2015

Decline continues at Tat Hong

Singapore based international crane rental and distribution company Tat Hong has reported its third quarter results.

Total revenues for the nine months declined 11 percent to $272 million, while pre-tax profits slipped eight percent to $36.7 million. Crane rental fell five percent to $191.2 million, the Chinese tower crane rental business was up 12 percent to $74.1 million, while general rental fell 16 percent to $44.9 million and distribution declined 22 percent to $161.7 million.

In the third quarter revenues slipped seven percent to $154.9 million, with crane rental down just three percent due to the disposal last year of
Singapore based Hup Hin Transport. Revenues at the tower crane business improved six percent to $25.1 million, while general rental fell 13 percent to $13.3 million and distribution dropped 15 percent to $55.9 million. Group pre-tax profit plummeted 32 percent to just under $10 million, due entirely to a $13 million one off gain on a land sale in Malaysia in the previous year.

Chief executive Roland Ng, said: “Whilst it was disappointing that we saw a significant decrease in our net profit for the third quarter, we note that last year’s results had included an exceptional gain of S$13.0 million. Thus, on a comparable basis, there has been an improvement in our underlying performance this quarter.”

“Our crane rental operations did well with the exception of Singapore which was impacted by the divestment of a subsidiary, greater competition and a slowdown in the construction sector. Fortunately, we have a wide footprint in the region where many infrastructure projects are being rolled out and better performance from our overseas operations has helped to minimise the adverse revenue impact from Singapore. We are also pleased to note that our tower crane rental business in China has been growing at a steady pace as it continues to benefit from strong demand from the infrastructure, power generation and commercial sectors.”

“On the flipside, trading conditions continued to be challenging for our distribution business especially in Singapore and Australia due to market competition and weak demand.”

Vertikal Comment

While the headline numbers do not look great, the fact is that the company is doing reasonably well, all things considered. It does look though as its general rental business - mostly in Australia - is looking less and less interesting, although it is still a $60 million (US$45 million) business. The company expects it to stabilise in the year ahead.

All in all the company is maintaining underlying profitability in a tough market.