18.11.2015

Profits halved at Tat Hong

Tat Hong has reported another tough quarter and half year to the end of September, with profits more than halved.

Total revenues for the six months to the end of September were $276.7 million 13 percent down on a year ago, partly due to the fall in the Australian dollar, compared to the Singapore dollar and partly due to the disposal of Hup Hin last year. Pre-tax profits for the period were more than halved to $12.75 million.

Looking at the second quarter revenues fell 10 percent to $137.4 million. This was made up of a 26 percent fall in crane rental to $47.9 million, a six percent fall in the Chinese tower crane business – currently due to be floated – to $23 million, a 23 percent fall in General equipment rental to $11.3 million and a 13 percent increase in distribution revenues to $54.8 million, thanks to crane sales in Hong Kong, Brunei and Thailand. Pre-tax profit for the quarter was $down 57 percent to $7.1 million.

Chief executive Roland Ng said: “The group’s performance in quarter two is a reflection of the difficult market conditions that we are facing. We foresee that the protracted slowdown in the Australian economy and weak currency as well as the slowing economies in the region will continue to affect our performance in the near term. As reported in the last quarter, the group has implemented tough measures to rein in costs and I am pleased to report that cost containment measures have yielded substantial savings of more than S$10 million for the quarter under review.”

“On a more positive note, our Tower Crane Rental division has started to see a pick up in the utilisation rates compared with the first quarter of this financial year as those tower cranes which were returned from completed projects gained new employment in the second quarter. We have also submitted our application to list Tat Hong Equipment Service, the investment holding company for our tower crane rental business in China, on the Taiwan Stock Exchange. Subject to receiving the approvals from various authorities, we expect to launch the IPO in 2016.”

Vertikal Comment

These results are simply an indication of the tough conditions in Australia compounded by translating them into a relatively strong Singapore dollar. The company is in control of the situation and just needs to take the steps it is taking to conserve cash and sit it out, while keeping an eye out for opportunities.