21 May 2012
Tan Chong Motor Holdings quarterly earnings fell 57.2% to RM 31.67 million, sales declined 13.1% due to Japan earthquake, Thailand floods and Malaysia tighter lending policy
(TCHONG closing price today (21.05.2012) was RM 4.50)
Tan Chong Motor Holdings Bhd's earnings fell 57.2% to RM31.67mil in the first quarter ended March 31, 2012 from RM74.08mil a year ago due to significant reduction in supply and demand but it expected a scaleable recovery.
"Earthquakes, floods, tighter credit have significantly cut supply and demand," it said on Monday, pointing out that revenue declined 13.1% to RM982.59mil from RM1.131bil a year ago.
In terms of earnings before interest, taxation, depreciation and amortisation (EBITDA), it fell by 42.6% from RM129mil to RM74mil. Earnings per share were 4.85 sen compared with 11.35 sen.
Tan Chong said the automotive division recorded RM972mil in revenue, down 13.4% from the RM1.122bil a year ago while segment EBITDA of RM67.8mil was a decrease of 46.1% from RM126mil a year ago. "The decrease in both top and bottom-line is due to stock constraints in popular models (such as Navarra, Grand Livina and Livina X-Gear) coupled with high selling costs.
"Credit growth is tighter compared to a year ago as per Bank Negara policy guidelines and we had to work harder and campaign more to cushion lower loan approvals and a weaker used car market. Operating margins fell from 9.5% to 5.2% in an intense market place," it said.
However, Tan Chong said it was undaunted by the slowdown as it was extending its geographic reach regionally and broadening its product pipeline to address a larger and more integrated Asean.
It said the group was building a robust and more geographically dispersed supply chain in Indochina, which has led to higher intrinsic cost increases to cover a wider footprint.
"In a stabilised situation where inventories have been rebuilt throughout the chain to normal levels, we can anticipate a scaleable recovery.
"Barring any unforeseen circumstances, we expect our vehicle sales would exceed the industry growth with the planned launch of a B sedan (a segment currently unrepresented) in addition to the introduction of selected CBU models selling well in various Asean markets," it said.