13.02.2018

Losses deepen at Tat Hong

Singapore based distribution and rental company Tat Hong, has reported its third quarter results with higher revenues but more red ink.

Looking the nine months to the end of December total revenues were $365.5 million up five percent on this time last year. Crane rental was seven percent lower at $94.4 million, while tower crane rental – mostly in China – was 12 percent higher at $86.8 million thanks to a larger fleet and higher capacity cranes on rent. The General rental business – mostly Australia - posted a 27 increase to $42.9 million thanks to higher utilisation. Finally, the distribution business came in five percent higher at $141.4 million due to higher sales in Australia and Singapore. Pre-tax losses increased from $4.4 million last year to $7.2 million this year due to a flat gross profit and substantial lower interest and other income.

In the third quarter revenues were just one percent higher at $122.9 million, with Crane rental improving two percent to $31 million, thanks to Australia and Malaysia, offset by lower revenues elsewhere. Tower crane revenues were 17 percent higher at $32.1 million exceeding mobile crane rental revenues for the first time. General rental revenues were 23 percent higher, once again that’s to better utilisation in Australia. Distribution revenues slipped 13 percent to $45.5 million, with higher sales in Australia more than offset by lower sales elsewhere, particularly with tower crane deliveries in Asia. Last year’s pre-tax profit of $2.8 million was converted to a loss of $1.2 million this year – once again due to a sharp reduction in other – non operational revenues compared to the previous year.

Vertikal Comment

While these are fairly depressing numbers from Tat Hong, the losses are more due to one off revenues and profit that boosted last year’s numbers. The company has made substantial progress in lowering sales and admin costs, which are not reflected in the bottom line. The Chinese and Australian operations have both performed very well and prevented this report looking a great deal gloomier.

The company is still involved in the possible acquisition of the company by the Ng family and Standard Chartered Private Equity (Singapore). And that may well be where the focus is for the moment. With the strong likelihood that the company will go private this year, these results probably have a lot less meaning than the state of the potential change in ownership.
It will be interesting to see how it develops.